I thought it might be fun to examine some really sorry looking stocks that look to be putting in a base. Base breakouts can be powerful moves. A base that is in the development stage can be encouraging, but you do not buy a stock, or market, while it is contained within that base. That’s because you can get your head handed to you if the stock breaks out to the downside. Better to wait and confirm an UPSIDE breakout before committing. Yes, buying higher is better.
So some of the stocks I am looking at today have NOT broken out – and some have. None have met ValueTrend’s fundamental criteria yet- aka the work done by our own Craig Aucoin. So, please use these ideas as stocks to watch, and do your own fundamental research should they appear technically attractive prior to committing. We don’t own any of these positions. We may in the future.
GE
If you look at the analysts’ comments on stockchase.com, you will find this stock to be a love it or hate it situation. There is no consensus on this stock. Some think it’s a value play. Others say General Electric is yesterday’s story.
The chart below shows us that the downtrend is stalling on this stock. It really needs to break $15 and stay above that level for a bit before examining the stock for possible entry. But it may be worth keeping an eye on this one. It does pay a pretty nice dividend of over 3%.
Valiant
VRX is showing an encouraging chart formation. Its flirting with the 200 day SMA, and its recently put in higher highs and lows. Lots of technical selling pressure will come in at $30 then $40. A break through $30 might suggest a pop to $40. Do your homework on this one. It had been a prime short candidate by many a hedge fund (except Bill Ackman, who was “long & wrong” for a long time). There was a reason for that short. The company was mismanaged. New investors need to see evidence of a better business plan going forward.
Trip Advisor
The downtrend seems to be ending for TRIP.
Under Armor
UAA has also put in what appears to be an early stage breakout. Certainly one to take a closer look at.
Fossil
FOSL looks like Under Armor—a new life beginning, perhaps. It seems like at least some of the retail stocks are improving
Chipotle Grill
Nothing like poisoning your customers to sink sales. That in turn sunk the stock. CMG has recently been surging – almost doubling from its low to the current level of $435. Perhaps the stock will break thorough this fairly massive current level of resistance in the low $400’s. This is the hardest chart of the group I’ve looked at to make a call on. But it’s worth doing some homework on for those with an eye for value.
6 Comments
I have been watching GE for a trade. Energy stocks keep grinding higher. I am trying to figure out when I should start taking profit,
see my blog on oil Dave
Hi Keith, I’m curious what your take on VEE.TO is. The five year performance is about 45% (not bad, but with some significant drawdowns) and it seem to me that it is a candidate for trading during downturns. The weekly chart shows it has just broken an uptrend since 2016 and is now trading at a very short term support of about $35. The 20 week MA is still above the 50 WMA. MACD, RSI and Stochastics are all pointing down and CMF started a downtrend in February. (I put a 20 MA on CMF and when it crosses that 20 MA and is confirmed by the three indicators above, it is a trading signal).
Would you agree that VEE is now or approaching a sell?
Fred–I know you are a longer termed investor so I am approaching it as such here: The last significant low on the weekly chart was in February–just over $34. Its above that now, but you are right in that there are some danger signs. I would likely hold it and if it busts the Feb low and stays below for a week or more, get out of the trade. That would be my way of doing things, anyway.
GNW
what is your reading on GNW. Have held for 2/3 years, averaged down early last year, still in the red but want to exit. Small position
Large move yesterday on volume, today a reversal on low volume
Hi Tom – I usually don’t do individual stock analysis on a “call in” basis on this blog – far too time consuming to start answering about everyone’s favorite stock–that’s more of something you might want to email ahead of time, or call in, for my next BNN show on Wednesday June 6th at noon.