Dow Roadmap Part 2

11.       Exxon Mobil, XOM, $90.26  A reasonably good performer in 2016, the stock opens the year bumping up against a downtrend line which forms part of a symmetrical triangle on the weekly chart. When viewed in the context of a longer term monthly chart, XOM is dead neutral essentially trading in a broad range for years. The SCTR reading is 43 which is just middling but XOM does perform a bit better than the S&P benchmark. There is a breakout point at $94 on the PNF charts and since price is above the moving averages, we’ll lean somewhat favorably towards it.  Despite this, I don’t expect that a big move on XOM is imminent.

2017-01-04-13

12.       General Electric, GE, $31.6  Essentially a sideways mover for most of last year.  Its SCTR number of 47 underscores the vanilla trend of the stock.  The long term up channel is still in play and so far, it looks to be a market performer only. Historically, breakouts to new highs are met with very little follow through, so I have no inclinations towards this stock for now.

2017-01-04-14

13.       Goldman Sachs, GS, $239.45  One of the stellar performers in the last quarter of 2016, the price approaches the all time high in the $250 area set in 2007. The price action has been vertical and consequently, moving averages lie far below current activity.  It looks to be in a “3 wave” of some kind and difficult to chase on the long side.  We expect a consolidation or retracement of recent activity into a “4 wave” of some kind.  The SCTR has one of the highest readings among all Dow stocks at 98, indicating steady support even at these prices. There is no acceptable risk/reward entry point for now so we will wait for an opportunity.

2017-01-04-16

14.       Home Depot, HD, $134.08  Home Depot is trading in a broad sideways channel since rallying from $18 to $140 in 7 years.  In 2016, the price only kept track with the S&P index and the present reading of 51 on the SCTR doesn’t show that buyers are super eager to be long the stock.  Accordingly, we’d be inclined to look for a long entry near the bottom of its range in the $118 area than chase it on a breakout above $139.  We note that $138 is also a double top buy on the PNF chart as well. 

2017-01-04-17

15.       International Business Machines, IBM, $165.99  This Dow component has been on a grind up from the lows made earlier last year in the $120 area and which was the subject of our bottom pick.  The pattern still looks favorable here but the SCTR has yet to hint at any prolonged accumulation.  We can see the supply that should cap the price move at the $175 area.  We’d be inclined to look at the lower end of the trading range at the $146 area to initiate new longs.

2017-01-04-18

16.       Intel, INTC, $36.27  Intel was a steady if unspectacular performer last year and a look at the weekly chart only tells of a steady slight uptrend.  A 63 reading on the SCTR is middling and it has only been a market tracker.  The stock is above its moving averages and a move above $38 creates a double top buy signal on the PNF. We’d be inclined to be long here with a stop down at the December lows of $33.

2017-01-04-20

17.       Johnson and Johnson, JNJ, $115.21   This chart looks to be very dynamic very soon, heading into a sharp wave “5” flag type move to the upside.  This pattern is also evident on the PNF charts as well.  A hammer candle last month is another hint of bottom made on the last downswing. The SCTR of 33 however gives off no such optimism.  We will watch for confirmation by this tool if prices begin moving to take out the recent highs at above the $118 area with high accompanying volume. We expect new highs to be made.

2017-01-04-21

18.       J.P.Morgan, JPM, $86.29  JPM is in a strong wave “3” up channel which have taken prices well beyond our moving averages. SCTR reads at 95 indicating continued support even as prices rise.  Indeed if we consult a monthly chart, we can observe that it is only now breaking away up from a long base.  Unfortunately there is no logical entry point after such a move. Thought it looks powerful, we will not be looking to enter a trade.

2017-01-04-22

19.       McDonalds, MCD, $121.72  MCD has been one of the steadiest performers in the Dow for the past 10 years.  Last year however was a range-bound one with little net progress from January. It appears that this sideways phase will soon turn into the next up-leg.  Our oscillators show no divergence and the wave pattern looks ready to resume on the upside.  We’ve yet to see the SCTR uptick but expect that it will once price begins to move.  A move below 109 will serve to protract the correction, but we expect that MCD will make new highs.

2017-01-04-26

20.   Merck, MRK, $58.87  Pharmaceuticals have moved fitfully in 2016, but MRK has been relatively stable netting a neutral return for the year.  There was a false breakout in mid-November that was not supported by our oscillators.  SCTR is low-ish at 32.  The stock has a negative relative strength to the S&P and a PNF buy doesn’t happen until $65.  Unless any of these events happen, we’d stand aside.

2017-01-04-25

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