No need to keep that gift receipt if you probe the long side of Gap (GPS) -- with a sell-stop at $24 or $26.
Many chartists point to May of this year as the peak in the stock market, but GPS peaked and turned down earlier; see the chart, above. Many also point to an August low and September retest as the current bottom to the market. GPS is bottoming later than the overall market. GPS stayed below the declining 50-day Simple Moving Average for much of the past 8 months, but it has now tested this average. The On-Balance-Volume (OBV) line has turned flat in the past two months, and we can see a bullish divergence between the lower price lows in October and November and the higher momentum readings in the lower panel.
This longer-term view of GPS, above, gives us a few more technical positives. GPS has held the $25 level recently, and when you scan the chart, above, from right to left, you can see how $25 acted as support in 2012. Using weekly data, this chart shows the OBV line rising and the Moving Average Convergence Divergence (MACD) oscillator in the process of crossing. This crossover for the MACD oscillator from below the zero line should be a "cover shorts" signal. Aggressive traders could go long GPS at current levels with a sell-stop at $24 -- which would be a new low for the downward move. Less aggressive traders could go long GPS on a strong close above $28.50 with $26 as a stop point.
Dec. 1, 2015 | 11:45 AM
GlaxoSmithKline Is Being Nursed Back to Health
- A rally into the $45 to $50 area would be my intermediate-term price target for GSK.
It is usually a good sign for the stock market when the middle cycle stocks rally (consumers, technology, and industrials). One consumer name that caught our chartist eye this morning was GlaxoSmithKline PLC (GSK).
GSK has drifted sideways to lower over the past 12 months with a downward sloping 200-day simple moving average -- see the chart above. In the past four months, GSK has started a turnaround to the upside. The 50-day moving average has flattened out and the price of GSK has crisscrossed it a number of times. The Moving Average Convergence Divergence (MACD) oscillator swung sharply to the upside in October and is close again to moving above the zero line, indicating that GSK was in an uptrend. The On-Balance-Volume (OBV) is still in a downtrend, but the action in November suggests a shift (see the paragraph below). Traders looking at the long side of GSK could buy it at current levels with a sell-stop at $39. Additional longs could be acquired when GSK closes above its 200-day average and/or over the October high.
In this longer view of GSK, above, we can see how GSK is rejecting prices below $40. On this weekly time frame, the OBV line has turned up, indicating the start of accumulation. Last, the MACD oscillator gave a positive crossover in October. A rally into the $45 to $50 area would be my intermediate-term price target for GSK.
Dec. 1, 2015 | 10:45 AM
Ready to Take a Whirl With Whirlpool
- My initial upside target is a return to the $180 to $190 area.
You already know the products and the TV commercials, now it's time to consider Whirlpool's (WHR) stock.
We have a number of positive/bullish technical developments in this short-term chart of WHR, above. WHR peaked in February and turned downward in March. A meaningful correction has been made, which normally makes a stock more attractive to potential buyers. Prices began to bottom in September, with a September/October bullish divergence from the momentum study in the lower panel. Prices have rallied above the 50-day simple moving average and the average line has flattened out. Last, the On-Balance-Volume (OBV) line has begun to trend upward in November, suggesting renewed accumulation by investors.
In this longer-term chart of WHR, above, I want to focus on two positives. First, WHR has been holding the $140 level. This is the same level that held repeatedly in late 2013 and throughout 2014. Second, the trend following Moving Average Convergence Divergence (MACD) oscillator has given a "cover shorts" signal and is pointed back up to the zero line.
Traders could go long WHR here and use a sell stop below $155. Add to longs on a close above $170. My initial upside target is a return to the $180 to $190 area.
Dec. 1, 2015 | 9:55 AM
Alcoa Is Digging Itself Out of the Hole
- Volume is now heavier on days when AA has closed higher, a sign of accumulation.
There is some bullish light at the end of the technical tunnel for Alcoa (AA).
The share price of AA has been under selling pressure for an unbearably long time, but it now looks like a tradable turn to the upside is underway. Looking at this short-term chart of AA, above, we can see a small double bottom at $8 with the first low in late August and the retest in November. Prices have just now closed above the 50-day simple moving average, which AA has crisscrossed the past three months. The short downward move in October and November -- lower lows in price -- made a small bullish divergence versus the momentum study in the lower panel, suggesting that there were scale-down buyers. Another more recent positive development is the upturn in the On-Balance-Volume (OBV) line in November. Volume is now heavier on days when AA has closed higher, which is a sign of accumulation.
There is good news and bad news in this chart above. The bad news is the decline the past 13 months and the down-sloping 40-week moving average. The good news is that prices are holding the previous 2013 lows. In addition the OBV line has been rising the past three months on this timeframe and the Moving Average Convergence Divergence (MACD) oscillator has crossed and is pointed upward. Aggressive traders could go long AA here, using a stop loss below the recent November low. Additional longs can be acquired when AA breaks above $11, the October high.