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Trade Recommendation: Bottom Pick MOS and NWL

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The S&P 500 Index (SPX) hit another fresh high of 2748.51 points yesterday. This is the fifth fresh high of the index in the last five trading days. Yesterday’s volume is still above the 20-day average, which means that market participants are willing to buy at this level, expecting that the index will climb higher. All of this is happening while the index is in extreme overbought territory in the daily, weekly, and monthly charts. As an experienced trader, I would take this opportunity to sell the greed. The best time to sell is when you don’t have to.

While selling the greed, use your capital and earnings to buy the fear. Let’s look at stocks that have fallen, but have managed to bounce back.

MOS – The Mosaic Company

The Mosaic Company (MOS) is a Fortune 500 firm and one of the world’s largest producers of two key crop nutrients: potash and phosphate. In mining those minerals, the company is able to produce high-quality fertilizer and animal feed. Half of which is sold to customers in North America while the other half is sold to customers around the globe.

MOS has been in a downtrend for over six years after generating a lower high of 74.31 on the weekly chart in July 2011. Things went from bad to worse when the stock broke critical support of 50 in July 2013. MOS then created one lower low after another until it tumbled down to 19 which is a support level that hasn’t been taken out since 2006.

Technical analysis show that MOS continues to respect the 12-year old support level. The stock has bounced from 19 with significant volume on the weekly charts in September 2017. This indicates that market participants are investing because they believe the stock is cheap. However, RSI shows that the stock is also respecting immediate resistance of 67. MOS may take a slight dip, which is a good opportunity for you to buy. The strategy is to buy as close to support of 23 as possible.

Take note: the stock is still in a downtrend, but there’s an opportunity to generate profits by buying the bounce. Consider selling positions at 34 to lock in gains. If the market breaches that resistance level, the next target is 50.

Weekly MOS Chart

Monthly MOS Chart

As of January 8, The Mosaic Company closed at 26.29.

Summary of Strategy

Buy: as close to support at 23 as possible

Target: 34 and 50

Stop: A close below 19 negates this trade call.

 

NWL – Newell Brands Incorporated

Newell Brands Incorporated (NWL) is a global leader in marketing commercial and consumer merchandise such as food storage, home organization products, reusable containers, and office supply products. The company’s portfolio includes popular brands such as Coleman, PaperMate, Elmer’s, Rubbermaid, and Parker Pens.   

NWL has been in a downtrend since it created a bearish double top at 55 in June 2017. The stock lost almost half of its value when it plunged to just below 28, which is a very important support level. Since 1996, the stock surged whenever it went above this level. On the other hand, NWL tends to nosedive if that support level is breached.

So far, the stock appears to respect this support level. Massive increase in volume levels from end of October to end of November indicate capitulation. The significant drop in volume last week may suggest exhaustion. This is a good opportunity to bottom pick.

The strategy is to buy at current price level. Initial resistance is 35. Take out this level, and we have a target of 44.

Weekly NWL Chart

Monthly NWL Chart

As of January 8, the Newell Brands Incorporated stock closed at 32.08.

Summary of Strategy

Buy: 32.08

Target: 44

Stop: A close below 28 invalidates 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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3.6 stars on average, based on 234 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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4 Comments

4 Comments

  1. jeffc89

    January 9, 2018 at 6:15 pm

    Hi Kiril, great analysis. Im considering call options in these stocks can you recommended possible option entry prices and/or expiry dates or target dates to play?

    • Kiril Nikolaev

      January 9, 2018 at 6:22 pm

      I don’t do option recommendations unfortunately.

      • jeffc89

        January 9, 2018 at 7:59 pm

        Okay no problem. Do you have potential timeframe for those target prices?

  2. snow4me

    January 15, 2018 at 3:38 am

    Why no articles on MCB coinbase’s bank? A new IPO with 8 million shares outstanding. This seems to me to be a micro cap waiting to catch the eye of Wall Street?

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Analysis

TEVA: The Time Has Come

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

The bull market has made it harder to earn good profits on the share prices of industry leaders. Prices are already high, and the correction may begin at any moment. Day by day, the rumors about crisis spread , and such a crisis is usually expected in the Fall, which is confirmed with the latest 20-year history. Case in point: the dotcom crisis started in early September 2000, with the market reaching its bottom only two years later.

Another fall started in mid Sep 2007, and turned into the global crisis in Aug 2008. Still, the market reached its lowest low and started recovering sooner, in 2009. At the same time, some players are still living the past and waiting for the market to collapse everyday, without noticing the considerable gains that have been made over the years.

There were 7 years between the dotcom and the financial crises. The next major decline occurred in August 2015 but it was short lived and did not result in a major crisis. In 3 years more, Trump became the US president and started resolving the negative trade balance issue by imposing customs duties on China. This, together with tax reforms, supported the markets a lot, and they went on growing. However, the situation is rather tense now, and the fall coming alone may lead to the investors being rather worried. The companies hit their earnings historical highs every quarter, and this may make the management feel dizzy.

Still, there are companies that, unlike most of their counterparts, did not grow following the Trump election. One of them is Teva Pharmaceutical Industries Limited (NYSE: TEVA). When the market started growing after the US elections, TEVA started going down heavily, eventually losing over 80% during 2 years. The company started having problems in 2016 when they bought Allergan (NYSE: AGN) at $40.5B. Before that, TEVA capital had been growing steadily since 2006, while the debts had been at the minimum.

Once TEVA acquired Allergan, the debt went sharply higher, which provoked a selloff immediately. At the same time, the earnings also started falling.

Even the quarterly earnings in 2016 were not enough for investors, as the stock price first did not move much, and then hit the support at $50.00 in the middle of the year and went further down.

The outlook is disappointing, and one would never even think about trading this stock, but still there are some things one should consider well.

Many years ago, many people lived in the countryside or at least used to spend some time there, and few heard of such a thing as an allergy. Then, however, people start migrating to cities, which are very polluted. This, perhaps, led to allergies being quite widespread nowadays. Allergies can be quite dangerous, as in many cases it may provoke an allergic shock, with the patient literally hanging between life and death. In this case, the only thing they need is a medicine that will help them survive before the ambulance arrives.

This is exactly what Teva Pharmaceutical Industries Limited created EpiPen, a medicine that removes allergic shock caused by insect bites, food, other medicines, or physical activity. An injection of EpiPen is enough to stimulate the cardiovascular system and the respiration organs, which prevents the consequences of an allergic shock.

According to some sources, in the US, there are around 43M people who may suffer from allergic shock any minute and should have such a medicine at hand. Ideally, such a person has got to have 2 doses of EpiPen, as sometimes one may be not enough. These two doses cost around $375, while the competition are trying to create the same medicine using adrenaline that should make it much cheaper. Still, they are having problems with medical tests, which means EpiPen has no competition right now. Another point is that it should be used within 12 months; otherwise, you will have to buy another dose. This brings stable profits, the ethical aspect is taken away.

Teva Pharmaceutical Industries Limited is a multinational company with 66 plants in 60 countries. This is one of the biggest pharma companies out there, and it’s no wonder that Warren Buffett has paid attention to it. In Q2, Berkshire Hathaway increased its stake of TEVA shares to 4.3%, or 2,7M shares, and is now one of the top three shareholders.

Meanwhile, in November 2017, a new CEO came to TEVA. Kare Schultz reduced costs drastically, and, as a result, the debt stopped growing first, and then was reduced by over $10B.

Technically, the downtrend is finishing, and an uptrend may start in the midterm, with the support being located at $20.00.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

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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4.4 stars on average, based on 7 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Stock Pick: Facebook

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Facebook Incorporated (FB) is a social media giant that lets users connect with other users, post comments, share pictures, and share links to interesting web content. The firm began as a school-based social networking platform at Harvard in 2004. The company headquarters are located in Menlo Park, California with 30,275 employees and touts 1.47 billion daily active users.

Technical Analysis of Facebook Incorporated (FB)

FB started to show signs of weakness on July 26, 2018 when it gapped down and opened at 174.89. The open was 19.59% lower than the previous trading day’s close of 217.50. This plunge marked the worst one-day drop in history, wiping out $119 billion in FB’s value. Mark Zuckerberg’s nightmares did not stop there as FB continues to plummet as of this writing.

Nevertheless, it’s always a good idea to take a contrarian stance when stocks make extreme moves.

Technical analysis show that FB is still within the ascending channel even though it dropped by so much in recent weeks. In other words, FB is still in an uptrend. There’s no need to push the panic button as long as the stock continues to respect its uptrend line.

On the contrary, it’s actually a good idea to consider buying at the uptrend support. The stock has bounced off this trendline since 2013 so there’s a very good chance that FB will do the same this time around. The stock has suffered so much losses in such a short period of time so a drop at this level should inspire a bounce.

Fundamental Analysis of Facebook Incorporated (FB)

On top of the technical analysis, fundamentals offer some support to our bullish sentiment. FB’s trailing twelve months (TTM) price to earnings ratio (PE ratio) is 25.92. The stock appears fairly valued. However, it has a five-year maximum of 232.91. This tells us that investors are willing to pay a premium for FB shares.

In addition, Zacks reports that Facebook’s first quarter results beat expert estimates. Analysts forecasted that the company would generate revenues of $11.45 billion and a profit of $1.36 per share. However, Facebook posted revenues of $11.97 billion and an earnings per share of $1.69. Though, second quarter earnings did poorly, which is the main reason the stock dropped on July 26, 2018.

Most investors are probably aware of the privacy scandal that was brewing earlier this year. It seems that most of those negative news and worse than expected short-term earnings are already priced into Facebook’s stocks. This tells us that the worst is most likely behind us.

The strategy is to buy the dip as close to $164 support as possible. If bulls can successfully defend the uptrend support, then FB might be able to muster a rally to our target of $210.

The timeline for the target is less than six months.

Weekly FB Chart

Monthly FB Chart

As of this writing, the Facebook Incorporated stock (FB) is trading at 167.18.

Summary of Strategy

Buy: As close to 164 support as possible.

Target: 210

Stop: Close below 160.

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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3.6 stars on average, based on 234 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 Pick: Nordstrom Incorporated

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Nordstrom Incorporated (JWN) is a fashion retailer that sells clothes, shoes, and accessories to men, women in children. The firm that started as a small shoe shop in Seattle back in 1901 has grown into a large publicly traded company with 373 stores in 40 states and in Canada. In 2017, Nordstrom achieved records sales of over $15 billion. The company continues to grow even in the midst of a retail apocalypse in the US.

Technical Analysis of Nordstrom Incorporated (JWN)

JWN started to show signs of weakness in July 2015 when it generated a lower high of 80.23. This was a clear signal that the bull run that started in August 2010 was over. The downtrend was confirmed in September 2015 when the stock breached support of 68 and broke out of a rounding top pattern.

As as result, JWN plunged to as low as 35.01 in June 2016. Since then, the stock has been showing signs of bullishness. It took JWN over two years of consolidation before it finally reversed its trend.

Technical analysis show JWN broke out of a large inverse head and shoulders pattern on the weekly chart. This happened when the stock breached resistance of 58 earlier this month. The breakout was validated by the highest weekly volume recorded by JWN this year.  

However, the weekly RSI is showing overbought signals. The stock must pull back to keep the ascent sustainable. This can be your opportunity to buy the dip.

Fundamental Analysis of Nordstrom Incorporated (JWN)

On top of the technical analysis, fundamentals offer some support to our bullish outlook. JWN’s trailing twelve months (TTM) price to earnings ratio (PE ratio) is 20.25. The stock appears fairly valued. However, it has a five-year maximum of 33.24. This tells us that investors are willing to pay a premium for JWN shares.

In addition, Zacks reports that Nordstrom’s second quarter results beat expert estimates. Analysts forecasted that the company would generate revenues of $3.79 billion and a profit of 83 cents per share. However, Nordstrom posted revenues of $4.07 billion and an earnings per share of 95 cents.

The strategy is to buy on dips as close to 58 as possible. If bulls can successfully back test the breakout, then we might see JWN ascend to 80.

The timeline for the target is six months.

Weekly JWN Chart

Monthly JWN Chart

As of this writing, the Nordstrom Incorporated stock (JWN) is trading at 61.56.

Summary of Strategy

Buy: As close to 58 as possible.

Target: 80

Stop: Close below 55.

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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3.6 stars on average, based on 234 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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