Stock Picks: PPG and COL

The S&P 500 (SPX) have bounced big on Friday, March 9, as it closed at 2,786.57. This is a crucial development as the index appears to be on track to alleviate lower high concerns. More importantly, the SPX seems to have created a bullish higher low setup at 2,647.32 on the daily chart. The key for the index is to close above 2,800 with heavy volume to trigger a bullish continuation pattern.

As the index gathers momentum, let’s look at names that are near their breakout points.  

PPG – PPG Industries Incorporated

PPG Industries Incorporated is an American Fortune 500 company that manufactures and distributes paints, coatings, and specialty materials. Founded in 1883, the company has two operational segments: Performance Coatings and Industrial Coatings. Their portfolio of global brands include PPG, Glidden, Comex, Olympic, Dulux, Primalex, and Bondex, among others.

PPG started its uptrend in October 2011 when it took out resistance of 40. Since then, the stock has created consecutive higher highs and higher lows until it met stiff resistance at 115 in December 2014. Bears claimed that level and sent the stock back to 82.93 in October 2015.

PPG bounced, and went as high as 117 in April 2016 before bears stepped in to defend 115 resistance. From that point, the range had been established until recent bullish events.

Technical analysis show that PPG has broken out of 115 resistance in October 2017 and went as high as 122.07 in January 2018. While the stock pulled back and dropped to 108.74 in February 2018, it bounced back and reclaimed 115 support. This shows that bulls are prepared to claim this level.

The strategy is to buy as close to 115 support as possible. If bulls defend this level, they will use it to climb to our target of 140. The process may take less than six months.

Weekly PPG Chart

Monthly PPG Chart

As of this writing, the PPG Industries Incorporated stock is trading at 116.83.

Summary of Strategy

Buy: As close to 115 as possible.

Target: 140

Stop: 112

DGX – Quest Diagnostics Incorporated

Quest Diagnostics Incorporated is a Fortune 500 American company that provides diagnostic information services. Founded in 1967, it has operations in Mexico, Brazil, Puerto Rico, and the United Kingdom. Their services encompasses Diagnostic Testing Services, Clinical Trials Testing, Healthcare IT, and Wellness and Risk Management for cancer, cardiovascular disease, infectious disease, and neurological disorders. Their product portfolio includes Quest Diagnostics, AmeriPath, Athena Diagnostics, Dermpath Diagnostics, Quanum, ChartMaxx®, Quest Diagnostics, ExamOne, MediCheck™, and Q2 Solutions.

DGX has been in a multi-year bull run that started when it breached resistance of 63 in November 2014. It created a series of higher highs and higher lows until it reached 112.97 in July 2017. At that point, the stock was in overbought territory. Bears sent it back to 90 support where DGX bounced and once again touched resistance of 107. While the stock pulled back, it seems that breakout is on the horizon.

Technical analysis show that DGX has created a bullish higher low setup at 95.27. The stock is using the higher low to take out 107 resistance. To increase the likelihood of a breakout, DGX must print around 2 million in volume. Those who bought the higher low might take profits at 107. The stock needs the volume to absorb selling pressure.

The strategy is to buy the breakout at 107 with the prescribed volume. With a successful breakout, the stock may climb to our target of 125. The process can take six months.

Weekly DGX Chart

Monthly DGX Chart

As of this writing, the Quest Diagnostics Incorporated stock is trading at 106.36.

Summary of Strategy

Buy: Breakout at 107 with 2 million volume.

Target: 125

Stop: Close below 104 after 107 breakout.

 

Featured image courtesy of Shutterstock.

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Kiril is a CFA Charterholder and financial professional with 5+ 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 funds, as he does his own crypto research and is a Product Manager at Mitre Media. 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.