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Tom Aspray, professional trader and analyst was originally trained as a biochemist but began using his computer expertise to analyze the financial markets in the early 1980s. Mr. Aspray has written widely on technical analysis and has given over 60 presentations around the world. Many of the... More
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  • 4 Strong Stocks In Top Sectors 0 comments
    Mar 11, 2013 1:23 PM | about stocks: XLF, MUR, BBT, SPY, INNI, AET

    With the market acting like the Energizer bunny, MoneyShow's Tom Aspray goes prospecting for stocks, which will provide good entry points for the next leg up.

    As the public focuses on the recent strength of the Dow Industrials, the professionals are becoming concerned by the failure of the S&P 500 or Spyder Trust (SPY) to also make new highs.

    Some may recall that in late January analysts were also concerned that the Dow Industrials had not confirmed the new highs in the Dow Transports. At the time, I was fairly confident that the strong technical readings suggested that the Industrials would also make new highs.

    The new highs in the NYSE and S&P 500 Advance/Decline lines make it very likely that the Spyder Trust will also surpass its all-time high at $157.42 but it may not happen right away. European markets and the stock index futures are both lower ahead of the opening, and I am expecting more choppy trading over the coming weeks.

    Since the February 25 lows, the Select Sector SPDR Financial (XLF) is up 6.3% versus a 4.5% gain in the Spyder Trust (SPY). The Select Sector SPDR Health Care (XLV) lagged slightly up just 4.3% but is still one of my favorite sectors. The Select Sector SPDR Energy (XLE) was up just a bit more than SPY but some of the oil stocks have the most compelling technical patterns.

    These are the sectors where I am looking for new stocks to buy and these four stocks look ready to move higher in the coming months but it will require a slight pullback from last week's highs to give us a good entry point.

    Click to Enlarge

    Chart Analysis: BB&T Corporation (BBT) hit a high last September at $34.37 and then dropped back to a low of $26.86, which was just above the 50% Fibonacci support level from the 2011 lows.

    • The correction from the February highs took BBT back its 20-week EMA before it closed strong last week.
    • The weekly relative performance has dropped from the 2012 highs and now appears to be bottoming.
    • The weekly OBV tested its WMA just a few weeks ago and has now broken through major resistance at line c and is leading prices higher.
    • There is initial support in the $31 area with further at $30.60 and the quarterly pivot is at $30.21.

    Invesco Ltd (IVZ) is a $12.39 billion dollar asset manager that has a current yield of 2.5%. Two weeks ago, IVZ tested the weekly uptrend, line e, that went back to the 2011 lows.

    • It dropped slightly below the 50% retracement support and retested the major breakout level at line d.
    • The weekly starc+ band is at $29.65 with the next upside targets in the $31-$32 area.
    • The weekly relative performance shows a well-established uptrend, line f and has just moved back above its WMA.
    • The daily, weekly and monthly OBV are all positive with the weekly OBV now close to breaking through resistance at line g.
    • The OBV has good support now at line h.
    • There in minor support now at $27.65-$28 with stronger at $26.70-$27.
    • The quarterly pivot is now at $26.03

    Click to Enlarge

    Murphy Oil (MUR) is an $11.88 billion dollar oil and gas refiner that has a 2.00% yield. It has been hugging its uptrend (line b) for the past five weeks.

    • There is major resistance from 2012 at $64.91 and $65.60, line a.
    • A breakout above this level should signal a move to the 2011 high of $78.16.
    • In 2008, MUR had a high of $101.47.
    • The relative performance is locked in a tight range (lines c and d) and an upside breakout looks likely.
    • The OBV moved above its downtrend, line e, in early 2013 and then pulled back to test its rising WMA.
    • A move in the OBV above its recent high would be bullish.
    • MUR has traded in a tight range of $59.19 to $64.10 in 2013.

    Aetna Inc. (AET) is a $16.57 billion dollar diversified healthcare benefits company that has a current yield of 1.6%.

    • The strong close last week was a sign that the uptrend, line g, had resumed.
    • The early 2012 high was $51.14 and an upside breakout would be quite positive.
    • The relative performance has held support, line h, and has moved back above its WMA.
    • The weekly on-balance volume (OBV) broke through its downtrend, line i, last September.
    • The OBV turned up last week after testing its WMA.
    • There is initial support in the $48.80 to $49.20 area with monthly pivot support at $48.11.

    What it Means: The two stocks from the financial sector have turned higher after testing their retracement zones and therefore should not drop back below the lows of the past few weeks. Both should pull back some after last week's strong close, which will provide an entry level.

    The daily bottom in crude oil and the tight trading range with positive technical studies make Murphy Oil (MUR) the best candidate for new purchase.

    The healthcare sector is still leading the market higher, and I would expect Aetna Inc. (AET) to break through major resistance.

    How to Profit: For BB&T Corporation (BBT), go 50% long at $31.14 and 50% long at $30.76, with a stop at $29.54 (risk of approx 4.6%).

    For Invesco Ltd. (IVZ), go 50% long at $27.68 and 50% long at $27.02, with a stop at $25.43 (risk of approx 7%).

    For Murphy Oil (MUR), go 50% long at $62.14 and 50% long at $61.16, with a stop at $58.22 (risk of approx 5.5%).

    For Aetna Inc. (AET), go 50% long at $49.26 and 50% long at $48.16 with a stop at $45.87 (risk of approx 5.8%).

    NEXT PAGE: The Charts in Play Portfolio

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: XLF, MUR, BBT, SPY, INNI, AET
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