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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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  • 3 Sectors...3 Bullish Stocks 0 comments
    Mar 10, 2014 11:03 AM | about stocks: XLV, XLF, SBUX, BSX, CME

    The mixed close, Friday, suggested a loss of short-term momentum and overnight export data from China pushed Asian stocks sharply lower. In early trading, the European markets are mostly showing nice gains while the US futures are a bit lower.

    Additional weakness in the US markets should provide a buying opportunity as quite a few stocks have not rallied with the market and now appear to have bottomed. Many show strong volume patterns but still this is not a market where you should chase prices.

    Some of the sectors, like consumer discretionary, were hit hard early in the year, but have now moved back into positive territory. The financial sector is also acting well as the Select SPDR Financials (XLF) is up 2.33%, so far in 2014, versus just 1.93 % in the Spyder Trust (SPY).

    Even though it peaked last Thursday, the Select SPDR Health Care (XLV) is still up 7.23% for the year. In my weekly review of how the key ETFs have done in 2014, only three are down for the year.

    These three stocks from these three key market sectors now look attractive for new purchase as they should move above their recent highs

    Click to Enlarge

    Chart Analysis: The weekly chart of Starbucks Corp. (SBUX) shows that it closed higher last week after testing the prior week's lows.

    • There is further support in the $68.50-$68.80 area, line a, with the weekly starc- band at $66.86.
    • Last week's close was back above the monthly pivot with the declining 20-day EMA and monthly projected pivot resistance in the $74.63-$74.82 area.
    • The quarterly pivot is at $78.03 and SBUX made a high of $82.49 last November.
    • The weekly relative performance turned up last week after reaching longer-term support at line b.
    • The weekly OBV made a new high in February even though prices were lower.
    • The OBV moved back above its WMA last week triggering an AOT buy signal.
    • There is minor support now at $72.50 to $71.60.

    Boston Scientific (BSX) is an $18.14 billion dollar medical and equipment company that closed last week above the prior four week highs.

    • In January, BSX had a high of $14.08 with the monthly projected pivot resistance at $14.16.
    • The 127.2% Fibonacci target from the completed flag formation is at $14.53.
    • The weekly chart shows good support in the $12.48 area (line d) and the 20 week-EMA.
    • The relative performance did confirm the recent highs and has turned up from its rising WMA.
    • The weekly OBV has moved back above its WMA and is now positive.
    • The daily OBV (not shown) has also completed its bottom formation.
    • The rising 20-day EMA is at $13.25 with the monthly pivot at $13.05.
    • In early February, the low was $12.47 with the monthly projected pivot support at $12.52.

    Click to Enlarge

    The CME Group Inc. (CME) is one of the largest worldwide brokers of futures and options. The weekly chart shows that it triggered a weekly high close doji last week.

    • In early February, CME had a low of $70.09 with chart support at line a.
    • The weekly starc - band is now at $68.47.
    • In December, CME hit a high of $81.56 with the weekly starc+ band at $82.21.
    • The weekly performance did not confirm the recent highs, line b, and it is below its WMA but has turned higher.
    • The weekly on-balance volume (OBV) broke through its resistance, line c, in early February.
    • The OBV shows a pattern of higher lows, line d, and made new highs again last week.

    The daily chart of the CME Group Inc. (CME) shows that it has rallied back to near-term resistance, line c, in the $78 area with the daily starc+ band at $78.56.

    • There is initial support now at $75-$75.80 with the midpoint of last week's range at $74.93.
    • The rising 20-day EMA is at $75.19 with gap support at $73.73 to $74.64.
    • The daily relative performance has moved back above its WMA but is still below its downtrend, line g.
    • The RS line does not yet show a completed bottom formation.
    • The daily OBV does appear to have completed its bottom as it has moved through resistance at line h.
    • A pullback in the OBV to its WMA should be a buying opportunity.

    What It Means: Each of these stocks is in a well-performing sector but we need at least a slight setback to hit our initial buying levels. They should be good additions to the Charts in Play portfolio.

    How to Profit: For Starbucks Corp. (SBUX), go 50% long at $72.58 and 50% at $71.80, with a stop at $69.17 (risk of approx. 4.2%).

    For Boston Scientific (BSX), go 50% long at $13.52 and 50% at $13.17, with a stop at $12.73 (risk of approx. 4.9%).

    For CME Group Inc. (CME), go 50% long at $75.88 and 50% at $74.77, with a stop at $70.97 (risk of approx. 5.8%).

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

    Stocks: XLV, XLF, SBUX, BSX, CME
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