Masonite International (DOOR) is a chart turnaround in progress, so some patience is needed.
The popular moving averages are mixed. We can see a death cross in early October between the 50-day and 200-day moving averages -- the 50-day going below the 200-day. Right now prices have rallied back above the 50-day. The On-Balance-Volume (OBV) is neutral, but with prices in a short-term downtrend, we take that as a positive, in that selling is light.
If selling was heavier, the slope of the OBV line would be down. We can also see a bullish divergence between the price action and the momentum study in October/November. The bullish divergences in the current (fourth quarter) market leaders showed up in August and September.
This weekly chart of DOOR, above, shows a flat 40-week moving average and slightly lower OBV line. In the bottom panel, you can see that the Moving Average Convergence Divergence oscillator is narrowing towards a bullish crossover. Aggressive traders could buy DOOR here, but waiting for this turnaround to develop more is not a bad approach either.
Nov. 19, 2015 | 11:15 AM
Bullish Indicators Point Masco in the Right Direction
- We see a long-term price target of $50.
The charts of Masco (MAS) are hitting on all cylinders, so to speak.
OK, let's do this a little differently. Take a step or two back from the screen and look at the chart of MAS, above. Notice the first sideways consolidation -- it lasted six months. The second consolidation lasted three months. Now prices have broken out on the upside. Shorter and shorter consolidations suggest a market that is gaining strength. The chart also shows a rising market, above the rising 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line is rising and the Moving Average Convergence Divergence (MACD) is bullish.
This longer-term view is also bullish. Prices are still headed higher, and a point-and-figure chart (not shown) suggests a long-term price target of $50. Prices are extended a bit, so try to buy a pullback if available.
Nov. 19, 2015 | 10:30 AM
Good Fortune; Fortune Brands Chart Shows Textbook Signs of a Breakout
- Traders could try to buy any quick dip towards $53 if available.
The breakout in Fortune Brands Home & Security (FBHS) should be bought. A straightforward recommendation, so let's look at the charts.
This is Exhibit A of what a breakout looks like. In the chart above, we can see the new high for the move up made yesterday. The moving averages, both the 50-day and the 200-day moving averages, are rising. The On-Balance-Volume (OBV) line is pointed up. Everything technical looks to be in gear on the upside. Traders could try to buy any quick dip toward $53 if available.
This chart of FBHS is also bullish. Prices, chart above, are above the rising 40-week moving average. The OBV line is neutral on this timeframe. The Moving Average Convergence Divergence (MACD) oscillator is bullish and rising. A point-and-figure chart (not shown) gives us an upside target as high as $75. We suggest a sell-stop below $50 for now.
Nov. 19, 2015 | 9:30 AM
Stanley Black & Decker Could Reach $125
- The stock is building momentum in a strong uptrend.
One way of finding new investment ideas is to first find what is working and then look for related, or "knock-on" plays. For example, Home Depot (HD) is a Dow Industrials component that has been in a strong uptrend. From HD, we can look at the chart of Stanley Black & Decker (SWK).
In this chart of SWK, above, we first want to look at the trend, which is up with prices above the rising 50-day and 200-day moving averages. SWK gapped up in the latter part of October over the September highs. There is a small double bottom in price in August and September, with a bullish divergence with higher lows from the momentum study. The only part of this chart that is not yet "in gear" is the On-Balance-Volume (OBV) line.
In this longer view of SWK, chart above, we can see a strong uptrend, with a rising 40-week moving average. The OBV line was rising for most of the rally and only recently turned flat. The Moving Average Convergence Divergence (MACD) oscillator just gave a bullish crossover above the zero line. The overall picture ¿ short term and long term -- suggests that SWK could reach $125 on its next upside leg.
