Thread: coolhand's Account Talk

Here's stock on my "watch" list as of today.

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Covidien (previous known as Tyco Healthcare) is a large medical supply and equipment company. It's taking a pretty good hit today as a result of missing its revenue estimate for the 2nd quarter. You can read about it here. The news was hardly something to get overly bearish about, but price has been struggling a bit even before today's announcement. In my opinion, the news presents a good buying opportunity.

I've drawn three support line targets for this stock. It's currently at the first one, near the upper-$61s. However, RSI and MACD are still pointing down. RSI is also showing that it's oversold as of today. That's why it's not yet a buy for me, only a watch. As a longer term buy and hold stock, it's current price is relatively attractive now, but there's a good chance it may get even more attractive in the days ahead. Once it appears RSI and MACD are turning, I'd consider buying this stock either as a short term trade, or a longer term buy and hold. It pays about a 1.6% quarterly dividend.

Remember, it's only a watch for the moment. That may change in the not too distant future, but we'll have to see how the technical picture develops.

I meant to post this earlier today, but got sidetracked. I got an intermediate term buy signal at the close on Thursday, but I'm not acting on it for at least two trading days. Today being one of them. Since price ran back to the top of the trend lines or bollinger bands on various indexes, it consider it prudent to wait a bit longer before acting on this signal. I'm out of IFTs anyway until Wednesday.

I posted the below charts (Microsoft and Southern Company) back on 9 January. That's the day I bought them. How have they fared?

Originally Posted by coolhand

Attachment 21839

The first stock I picked up is Microsoft. You can see that the 50 dma passed through the 200 dma not too long ago and price is now much more attractive. This is still a solid company and they are sitting on a mountain of cash. Not to mention they pay a decent quarterly dividend of about 3.3%.


Attachment 21840

Very similar situation with Southern Company. The 50 dma is below the 200 dma and the company is on solid footing. And being a utility they should do well in an economic downturn. This bull market is getting long-in-the-tooth after all. They pay a quarterly dividend of about 4.5%.

I generally expect to hold these stocks for the longer term. They appear to have good upside potential and as I mentioned, will pay handsome dividends while I wait for anticipated price appreciation in the months to come.

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I've annotated hypothetical buy and sell prices to illustrate how these stocks have fared since I posted them more than 3 months ago. Southern Company would have returned around 13.8%, not including a quarterly dividend if one bought and sold on the dates annotated (blue arrows). This is a utility stock, and a good one for longer term players, but like so many stocks, it's run hard and deep for some time now. I'm not sure how much more upside we can expect in the intermediate term, but I do note that MACD and RSI are now falling. That doesn't necessarily mean its upside run is over (liquidity lifts many boats), but that's a healthy gain in a relatively short time frame. It's due to pay out another dividend soon (which is why I'm still holding it).

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Microsoft had an even better run. Buying and selling on the annotated dates would have given one a gain of almost 23%, plus a dividend. Unlike Southern Company, it's MACD is pointing higher and RSI remains robust, although it's also overbought. This is a stock that I think has better upside potential in the longer term than SO does as MSFT is sitting on a tons of cash (they can absorb economic shock easier than many other companies) and they aren't a utility, which are considered conservative stocks. In less than three weeks (16May), holders of this stock will qualify for this quarter's dividend.

I do not recommend buying these stocks at this time. I only wanted to update you on how these stocks did since I originally posted them. Their price points are now far too high for entry in my opinion.

Originally Posted by coolhand

I posted charts (Microsoft and Southern Company) back on 9 January.

I do not recommend buying these stocks at this time. I only wanted to update you on how these stocks did since I originally posted them. Their price points are now far too high for entry in my opinion.

I held SO for awhile last year, CH. Would have held longer, but I realized after buying that I goofed, bought in the taxable account instead of the Roth account. So I sold for small profit (which got taxed), but haven't bought back since then due to price action and chronic procrastination and distraction and indecision about everything else out there that I might buy for oh so many different reasons. I will buy SO again someday, this time in the appropriate account (nontaxable), when conditions are better.

Originally Posted by alevin

I held SO for awhile last year, CH. Would have held longer, but I realized after buying that I goofed, bought in the taxable account instead of the Roth account. So I sold for small profit (which got taxed), but haven't bought back since then due to price action and chronic procrastination and distraction and indecision about everything else out there that I might buy for oh so many different reasons. I will buy SO again someday, this time in the appropriate account (nontaxable), when conditions are better.

I think that when the market finally has its correction, this stock may be a buy once again. There's a lot of interest in defensive, dividend paying companies, and utilities generally fit that bill very well.

I bought my first SO position back in July '07 at $32 and have been nibbling on it ever since. I may never sell it.

Originally Posted by Birchtree

I bought my first SO position back in July '07 at $32 and have been nibbling on it ever since. I may never sell it.

This is the reason I try to focus on the longer term with my portfolio. At least as much as I can. 20% gains in a few months can sometimes turn into 50% or more gains over longer periods of time. Not with all stocks of course, but that's why diversification is important. And dividends can play a huge role in achieving that kind of return too.

Of course, I think I'm preaching to the choir, huh?

Originally Posted by coolhand

Here's stock on my "watch" list as of today.

4-26-2013 1-14-28 PM.png

Covidien (previous known as Tyco Healthcare) is a large medical supply and equipment company. It's taking a pretty good hit today as a result of missing its revenue estimate for the 2nd quarter. You can read about it here. The news was hardly something to get overly bearish about, but price has been struggling a bit even before today's announcement. In my opinion, the news presents a good buying opportunity.

I've drawn three support line targets for this stock. It's currently at the first one, near the upper-$61s. However, RSI and MACD are still pointing down. RSI is also showing that it's oversold as of today. That's why it's not yet a buy for me, only a watch. As a longer term buy and hold stock, it's current price is relatively attractive now, but there's a good chance it may get even more attractive in the days ahead. Once it appears RSI and MACD are turning, I'd consider buying this stock either as a short term trade, or a longer term buy and hold. It pays about a 1.6% quarterly dividend.

Remember, it's only a watch for the moment. That may change in the not too distant future, but we'll have to see how the technical picture develops.

One trading day later and COV is up about 2% at the open. It's not a confirmed upside move yet, but I'm thinking the bottom is probably in for now.

Barrick Gold and Newmont Mining were two companies I posted charts on back in late January. At the time I had them on "watch" and was not ready to buy as this sector was very weak and susceptible to further selling pressure. Fresh charts are posted below.

Originally Posted by coolhand

Attachment 22034

The first chart is Newmont Mining Corp. I'm seeing a possible triple bottom reversal pattern setting up, but the stock has yet to confirm this pattern with a breakout in the $48 area (the accum/dist line has a positive divergence over the past 2 months). For a longer term buy and hold strategy, the stock has potential. And it pays a quarterly 3.1% dividend, which makes it more attractive to investors.

Attachment 22035

I find Barrick Gold Corp. intriguing, mainly because I'm thinking that over the long haul, gold may begin another ramp higher, which I would think may put upward pressure on this company's stock. Looking at the chart, price is sitting right at the lower support line and the accum/dist line is showing a negative divergence, which suggests it's heading lower. But like Newmont Mining, it may be a stock worth watching for the longer term buy and hold investor. Let's look at a shorter term view of this stock.

Attachment 22036

We can see that support has been holding around the $33 area since mid-November. And again, that A/D line suggests it will probably fail to the downside in the short term. If that happens, this stock will begin to look attractive at some lower price. I'll be watching that A/D line for a clue in the weeks ahead. And this stock pays a quarterly dividend of about 2.7%.

So when the bull market finally ends, will gold and mining stocks find favor?

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ABX was looking as though it was bottoming several months ago, but this sector ended up succumbing to further downside pressure. Since I posted the first chart on 24 January, ABX has fallen more than 41% as of today. It's still too early for short term traders to be sure it's bottoming, but RSI and MACD are rising. Still, this is one that I'd set a wide stop on as these stocks can be volatile and could see even further price deterioration down the road. For longer term investors, it might be worth taking a "small" position just to have exposure in this sector, but even a buy and holder can afford to wait and see if price really is turning up.

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It's pretty much the same story with NEM. This stock has fallen about 22% since I posted the original chart. The technicals look similar and the stock is worth watching for possible entry in the weeks/months ahead.

I continue to watch both these companies, but I'm not ready to buy as yet.

GDX and GDXJ are both looking good at these levels.

FXA looking good for gold right now with possible inverted H&S setup.

Originally Posted by Bullitt

GDX and GDXJ are both looking good at these levels.

FXA looking good for gold right now with possible inverted H&S setup.

Hey Bullitt, nice to hear from you!

Yes, GDX and GDXJ charts look very similar to the miners charts I posted.

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And I see the H/S pattern on FXA. It looks poised for a continuation higher, but why is this good for gold?