Two actions on my monthly shopping list
Over the past ten years, inventory digitization has become very popular. However, designing a good inventory analysis is only the first step. As many of you know, I spend a good chunk of every Saturday and Sunday running and reviewing my analytics, and at the end of the month I’m looking for a basket of stocks to find which ones might work best in the coming months. Stocks are selected using a combination of momentum, volume, relative performance and chart formation criteria.
Developing the list of positive and negative actions is only the first step in my scanning routine, as each graph is then reviewed to identify the best opportunities. Whether I am focusing on the buy or sell list depends on my analysis of the general market trend.
Monthly Advance / Decline line analysis is the most important factor in determining the general market trend. The S&P 500 Advance / Decline line last positively crossed its 21-month Weighted Moving Average (WMA) on March 31, 2016 (line a). During the sharp drop at the end of 2018 (point b), the SPY fell well below its monthly band of stars. It was a sign that SPY was in a low risk buy zone and a high risk sell zone. The positive reading of the A / D line indicated that the bull market was still intact, so investors’ long positions should be held.
SPY was even more oversold in March 2020, when it had a low of $ 216.44 (point c), well below the starc monthly band of $ 263.24. During the decline, the monthly A / D line remained 3.7% above its rising WMA. Of course, traders should use both weekly and daily A / D line readings to manage and trade short-term market trends. The weekly and daily analysis of the A / D lines also ended positively in May 2021.
PerkinElmer (PKI) is one of the two titles that looks the best based on my monthly analysis. It is a health diagnostics and research company that hit a record high of $ 162.54 in January. The February high of $ 156.52 is now initial resistance, with the starc + monthly band at $ 173.18. PKI closed in May at $ 145.06. The midpoint of last month’s range is $ 137.92, with the low at $ 126.75. The breakout level (line a) was tested in March. For June, the monthly pivot is $ 140.30.
the relative performance (RS) closed above its WMA in May, indicating that PKI was starting to dominate the S&P 500. PKI’s RS had previously tested long-term support (line b) after hitting a new high at the start of the year. The weekly RS (not shown) broke above its WMA two weeks ago. Volume increased in May, but was below the March high.
the Volume at equilibrium (OBV) moved above resistance (c line) last October which was a very bullish sign. It hit new highs in the past two months, pushing prices up. The OBV suggests that the January high will likely be broken.
Salesforce.com (CRM) is a fairly well-known software company. It has been correcting itself since September, when it peaked at $ 284.50. With the May close at $ 238.10, it is still down over 16% from its high. It was significantly higher on Friday, gaining 5.4% in reaction to its profits, as well as the very strong orientation for 2022. He closed well above his daily starc + strip.
The CRM had a March low of $ 201.51 (point a) as it hit the rising 20-week exponential moving average (EMA), which now stands at $ 205.86. The correction from September highs has lasted long enough to change sentiment on CRM. The February high is at $ 251.23, and a move above that level will confirm that the correction is over. The starc + monthly band is at $ 298.81. CRM opened in May at $ 230.77 and had a low of $ 208.91. The monthly pivot for June is $ 230.17.
Monthly RS came out of support (row b), but is still below its WMA. The weekly RS (not shown) just closed above its WMA. OBV has formed a pattern of higher peaks since 2018 (see arrow). The monthly OBV held up above long term support (line c) and closed above its WMA in May. This is consistent with the end of the correction. The weekly OBV (not shown) is also positive.
Monthly analysis suggests these two stocks are expected to be higher over the next six months and are likely to overcome earlier all-time highs. The entry point will help determine the risk / reward profile, but I wouldn’t expect either stock to fall below May’s lows. Given Friday’s strong rally in CRM, I would look for a lower entry point in the next week or two.
If you want to learn more about the markets and want specific advice on ETFs or stocks, I hope you will consider the Viper ETF Report or the Viper Hot Stock Report. Reports are published twice a week for just $ 34.95 each per month.