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Stock Picks: Broadcom and CA Technologies

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The S&P 500 500 (SPX) plummeted yesterday, as it lost 113.19 points and settled at 2,648.94. An index losing over 4% of its value in one day is not a good sign. It rattles investors, and ignites market volatility. Expect to see wild swings in the coming days.

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As fear enters the market, let’s stay on the defensive and focus on stocks that are near strong support levels to minimize risk.

AVGO – Broadcom Limited

Broadcom Limited is a company that designs, develops, and supplies products based on analog and digital semiconductor technology in the field of wired infrastructure, wireless communications, and enterprise storage. Formerly Avago Technologies, their areas of advancement and expertise include Cloud scale networks, 5G-HD enterprise WIFI, broadband access solutions, smartphones, and automotive solutions.

AVGO entered a corrective phase after hitting a five-year high of 285.68 in November 2017. Unfortunately for investors, the stock broke below 260 support in January 2018, which triggered a bearish head and shoulders pattern in the daily chart. As the critical support level was taken out, the stock’s trend reversed and forced participants to cut their losses. Yesterday, the stock went as low as 227.6.

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Technical analysis show that the stock already hit the head and shoulders pattern target at this level. Also, 227.5 is a support level that the stock has respected since May 2017.  In addition, the surge in volume when the stock dropped to this level hints that bulls are prepared to make a stand. Lastly, RSI in the daily chart is in oversold territory. This means that a bounce is most likely to happen soon.

The strategy is to wait for bulls to defend 227.5 before buying. Should this level hold firm, the stock will bounce back to 260 within a month.

Take note: the stock is currently in a downtrend. We’re just playing for the bounce.

Daily AVGO Chart

Weekly AVGO Chart


As of February 5, the Broadcom Limited stock closed at 228.10.

Summary of Strategy

Buy: Wait for bulls to defend 227.5 before buying

Target: 260

Stop: A close below 223 negates this trade call

 

CA – CA Technologies Incorporated

CA Technologies Incorporated is a multinational publicly held corporation. Ranked as one of the largest independent software corporations in the world, the company claims to make “software that helps” businesses to compete. Their portfolio includes systems software and solutions in Advanced Analytics, Agile Management, API Management, Automaton, Cloud Solutions, Continuous Delivery and Testing, DevOps, IT Operations Management, and Mainframe.

CA has been locked in a wide range since April 2013 when the market closed at 26.97. It went as high as 36.22 in January 2014 before succumbing to selling pressure. The stock eventually dropped to 25.25 in October 2014. CA respected support at 26, and used it to climb to 34.99 in August 2016. While the stock moves slowly, its destination is easy to predict.

Technical analysis show that the stock has once again failed to breach resistance at 35, something that it has done since 2001. Yesterday, the stock lost over 4% after temporarily going above 35 on February 2. As 35 resistance still reigns, the weekly and monthly charts tell us that CA will most likely head to 26.

The strategy is to keep watch on CA. Buy once its near 26. It might take CA three months to plunge to 26, and six months to climb back to 35. This is a long term play that’s worth the wait. 26 is a level that’s never been breached since 2013 and 35 is a 17-year old resistance level. We have very strong support and resistance levels that we can rely on to generate a trade with a fairly high degree of certainty.

Weekly CA Chart

Monthly CA Chart

As of February 5, the CA Technologies Incorporated stock closed at 33.56.

Summary of Strategy

Buy: As close to 26 as possible.

Target: 35

Stop: A close below 25 negates this trade call

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 167 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Stock Picks

Stock Picks: LUK and MRO

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The S&P 500 (SPX) went as high as 2,742.10 yesterday, May 14, 2018, before succumbing to profit taking. This pullback is healthy given the index’s rally from a low of 2,594.62 on May 3. The bullish outlook remains as long as the SPX remains above 2,680.

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As the index remains resilient, let’s look at stocks flashing signs of strength.

LUK – Leucadia National Corporation

Leucadia National Corporation (LUK) is an American conglomerate and investment holding company. Incorporated in 1968, it is a company focused on return on investment and long-term value. Their financial services business portfolio includes Berkadia Commercial Mortgage LLC, Foursight Capital and Chrome Capital, FXCM Group LLC, HomeFed Corporation, Jefferies Group LLC, and Leucadia Asset Management.

Technical analysis show that LUK is primed to take out resistance of 27. This comes after it created a bullish higher low setup when it dropped to as low as 21.61 on April 6, 2018. The setup was affirmed by a strong bounce to 24.75 on April 9 with volume that’s 173.47% higher than its daily average. Breach of the resistance would trigger the cup and handle reversal structure on the weekly chart.

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Also, fundamental analysis show that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of LUK is 19.66. The stock looks fairly valued based on the PE ratio, but it has a five-year maximum of 171.43. This suggests that investors are willing to pay a premium for LUK shares.

The strategy is to buy the breakout at 27 as long as the stock prints seven million shares on the daily chart. Those who bought the higher low are likely to take profits at the resistance. The stock needs buyers to absorb the selling pressure.

Once bulls take out the resistance, the stock may attract trend followers and momentum traders who may help lift LUK to our target of 39. The process may take more than six months.

Weekly LUK Chart

Monthly LUK Chart


As of this writing, the Luecadia National Corporation stock is trading at 24.57.

Summary of Strategy

Buy: Buy breakout at 27 as long as the stock generates seven million shares on the daily chart.

Target: 39

Stop: Close below 25.2 after the breakout.

MRO – Marathon Oil Company

Marathon Oil Corporation (MRO) is an American petroleum and natural gas exploration and production company founded in 1887. They primarily operate in North America: Eagle Ford in Texas, Permian in New Mexico, STACK and SCOOP in Oklahoma, and the Bakken in North Dakota. The company’s international segment produces and markets crude oil and condensate, NGLs and natural gas outside of North America, and Equatorial Guinea (E.G.). The Oil Sands Mining segment mines, extracts, and transports bitumen from Alberta, Canada.

Technical analysis show that MRO has taken out resistance of 19. This triggered the inverse head and shoulders pattern on the weekly chart. The breakout was affirmed by a rally to 21.68 on May 9, 2018. However, the stock is touching overbought territory on the daily chart. The possible dip should be your opportunity to buy near the breakout point.

Furthermore, fundamental analysis reveal that MRO’s trailing twelve months (TTM) PE ratio stands at 14.68. The stock still looks attractive considering that its five-year maximum is 26.02.

The strategy is to buy on dips as close to 19 as possible. As long as the stock stays above 19, it has the momentum to climb to our target of 31.50.

The process may take six months.

Weekly MRO Chart

Monthly MRO Chart


As of this writing, the Marathon Oil stock is trading at 21.42.

Summary of Strategy

Buy: Buy on dips as close to 19 as possible.

Target: 31

Stop: 18

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 167 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Stock Picks

Stock Picks: KMB and KR

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The S&P 500 (SPX) has finally managed to breakout of a descending triangle formation and negate the bearish outlook that came with a series of lower highs. In addition, the index appears to have broken out of a small double bottom reversal pattern on the daily chart. The breakout can help propel the index to resistance of 2,800.

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With the index showing strength, let’s look at stocks that are flashing bullish signals.

KMB – Kimberly-Clark Corporation

Kimberly-Clark Corporation (KMB) is an American multinational company that is engaged in the production and marketing of personal care products made from natural or synthetic fibers. Incorporated in June 1928, the company has over 42,000 employees working in facilities in 38 countries. Kimberly-Clark’s product portfolio includes brands such as Huggies, Kotex, Kleenex, and GoodNites.

Technical analysis show that KMB appears to be bouncing at the 61.8% Fibonacci level. This comes after the stock printed volume that’s 90% higher than its weekly average. The surge in volume points to the presence of bulls at this price level.

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In addition, the last two candlesticks on the weekly chart are hammers. The long wick below the candle’s body suggests that there are buyers below 104. Lastly, a bullish divergence can be seen on the weekly chart. This is a strong hint that a reversal is in sight.

Also, fundamental analysis reveal that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of KMB is 20.61. The stock may fairly priced based on the PE ratio, but it has a five-year maximum of 79.47. This suggests that investors are willing to pay a premium for KMB shares.

The strategy is to buy at current market price. As long as the stock stays above 100, it has the momentum it needs to rally to our target of 118.50. The process may take less than three months.

Weekly KMB Chart

Monthly KMB Chart

As of this writing, the Kimberly-Clark Corporation stock is trading at 104.90.

Summary of Strategy

Buy: Buy at current market level of 104.90.

Target: 118.50

Stop: Close below 100.

KR – The Kroger Company

The Kroger Company (KR) is an American retail company that operates supermarkets, department stores, jewelry stores, and convenience stores across the company. Incorporated in April 1902, Kroger has grown to become the third largest private employer in the United States with over 443,000 employees to help the company generate a net income of $1.907 billion in 2017.

Technical analysis show that KR has established a bullish higher low setup of 22.85 in March 2018. The move came after the stock generated volume that’s 124% higher than its weekly average. Since then, volume has been declining, which suggests that participants are losing interest to sell at this price level. In addition, KR appears to be respecting the 38.2% Fibonacci level.

Furthermore, fundamental analysis reveal that KR’s trailing twelve months (TTM) PE ratio stands at 11.89. The stock still looks attractive. It appears to have upside potential based on its PE ratio.

The strategy is to buy as close to 24 as possible. As long as the stock stays above 23, it may have the strength to rally to our target of 30.

The process may take less than three months.

Weekly KR Chart

Monthly KR Chart

As of this writing, The Kroger Company stock is trading at 24.57.

Summary of Strategy

Buy: Buy as close to 24 as possible.

Target: 30

Stop: 23

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 167 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Stock Picks

Stock Picks: JEC and KSU

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The S&P 500 (SPX) has managed to go as high as 2,683.35 yesterday, May 7, 2018. Bulls, however, failed to stay above 2,680 resistance and the index closed at 2,672.63. Unless SPX can take out 2,680 soon, it will likely break 2,600 support.

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As the index shows further signs of weakness, let’s look at stocks that have broken out of long term consolidation.

JEC – Jacobs Engineering Group Incorporated

Jacobs Engineering Group Incorporated (JEC) is a Fortune 500 international firm that provides technical, professional and construction services to industrial, commercial, and governmental clients. Founded in 1947, the company now has 54,000 employees in over 230 locations across the globe. Jacobs Engineering Group, Inc. operates under the following lines of business: Petroleum and Chemicals, Buildings and Infrastructure, Aerospace and Technology, and Industrial.

Technical analysis show that JEC has breached resistance of 60 in November 2017. The price movement triggered the cup and handle reversal pattern on the weekly chart. The breakout was confirmed by a follow through to 72.18 in January 2018.

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However, the stock has been pulling back. This slight dip could be your chance to buy near the higher low.

Also, fundamental analysis reveal that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of JEC is 30. The stock may look expensive based on the PE ratio, but it has a five-year maximum of 36.44. This suggests that investors are willing to pay a premium for JEC shares.

The strategy is to buy on dips as close to 55 as possible. The stock remains bullish as long as it is above this level. It may have the momentum to reach our target of 84.

The process may take more than six months.

Weekly JEC Chart

Monthly JEC Chart

As of this writing, the Jacobs Engineering Group stock is trading at 56.72.

Summary of Strategy

Buy: Buy on dips as close to 55 as possible.

Target: 84

Stop: Close below 52.6.

KSU – Kansas City Southern Railway Company

Kansas City Southern is a transportation holding company with domestic and international rail operations founded in 1887. The company is focused on connecting the central United States’ commercial and industrial markets with Mexican industrial cities. Kansas City Southern operates through subsidiaries, namely: The Kansas City Southern Railway Company (KCSR), Kansas City Southern de Mexico, S.A. de C.V. (KCSM), Mexrail, Inc. (Mexrail), KCSM Servicios, S.A. de C.V. (KCSM Servicios), Meridian Speedway, LLC (MSLLC) and Panama Canal Railway Company (PCRC).

Technical analysis show that KSU has taken out resistance of 100 in June 2017. This triggered the large inverse head and shoulders pattern on the weekly chart. The breakout was validated by a rally to 114.91 in April 2018. Currently, the stock is still in consolidation. This could be your chance to buy near the support.

Furthermore, fundamental analysis reveal that KSU’s trailing twelve months (TTM) PE ratio stands at 11.64. The stock still looks attractive. It has a lot of upside potential based on its PE ratio.

The strategy is to buy on dips as close to 100 as possible. If bulls preserve the new support, they may finish creating the base before moving to our target of 125.

The process may take more than six months.

Weekly KSU Chart

Monthly KSU Chart

As of this writing, the Kansas City Southern Railway Company stock is trading at 106.89.

Summary of Strategy

Buy: Buy on dips as close to 100 as possible.

Target: 125

Stop: 95

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 167 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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