By Joey Vazquez, Oxen Group contributor
We continue our search for the most attractive companies to buy and sell right now. We still feel were trading in a bearish market and our trading ideas suggest that. Today, I strive to find attractive companies with strong or weak fundamentals and technicals that will outperform or underperform the markets. Should you buy or sell these companies?
CME Group Inc. (CME):
Today, it announced that May volume averaged 13.2M contracts per day, which was down 2% from May 2011, but up 24% from April 2012. We believe that CME will continue to see solid volume for the rest of the year with more attention paid to options and futures as equity uncertainty remains. The same thinking works with CBOE (CBOE) that should see more interest with Volatility (VXX). CME group is looking quite strong and it recently broke its 200 day MA as well as its pivot point. CME will now look to challenge its 50 day MA and resistance at the $269.11 area. CME stochastics just turned up and that's a good bullish indicator. Its CCI indicator is headed into the +100 area which is also a strong indicator of strength in the stock. CME MACD indicator is also headed higher with no reversal in sight.
Trade Idea: Look to go long CME
Illinois Tool Works Inc. (ITW):
Illinois Tool Works appears to be breaking down, not even an upgrade to overweight from neutral from JPMorgan Chase (JPM) on the 25th of May was able to turn ITW around. If there are concerns over the economy, companies that operate in auto parts will continue to suffer like Dover (DOV) and Entegris (ENTG). On the way down, ITW broke various support levels including its 20 day MA, 50 day MA and pivot point. ITW is currently testing support at $51.13 but its chart is indicating it will break that also. ITW MACD just plunged through its signal line, telling us more selling will follow the stock. ITW CCI indicator is just turned into the -100 area, indicating the start of a new bearish trend. ITW stochastics are already pointing down as well.
Trade Idea: I would look to go short ITW
Xylem Inc. (XYL):
Xylem Inc. has not been the same since their second quarter miss on the 3rd of May. The company is going through some cyclical weakness right now, and they fundamentally look weak. XYL recently tried to retake its 200 day MA and pivot point but they proved to be unsuccessful, creating very strong resistance now. XYL MACD indicator crossed beneath its signal line giving us a very bearish indicator. Its CCI indicator is also looking very bearish as it has entered the -100 territory. The OBV indicator is telling us the positive momentum is being drained out of the stock as well.
Trade Idea: I would look to go short XYL
Genuine Parts Co. (GPC):
Genuine Parts Co. hit a new 52 week high in very early May, then all the weakness that occurred in May took GPC for a tailspin. Genuine continues our fundamental theory that auto parts are going through some cyclical weakness right now as we hit the summer as well economy starts to suffer, and GPC is another stock that is weakening. GPC recently tried to rally but the resistance from its 50 day MA and pivot point proved to be too strong. It is now going to test its support at its 200 day MA, if this level is broken look for GPC to continue breaking down. GPC CCI indicator is signaling it will break its 200 day MA since it just entered its -100 area. GPC MACD indicator as well as its stochastic are both pointing downward and are suggesting this break as well. I would look to go short on a break of its 200 day MA and long O`Reilly Automotive Inc. (ORLY) if it can regain its 50day MA.
Trade Idea: I would look to go short GPC & Long ORLY
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.