I am seeing more and more constructive charts show up on individual names. That could be another manifestation of what we had noted about the big sentiment clean out this summer… that there is a good chance the market is going to remain stable for several weeks or months. In this environment, some stocks are starting to look bullish as sentiment recovers (yet is not alarmingly over bullish).
To that point, let’s take a look at Boston Scientific, a medical device maker and one-time customer of mine from the old manufacturing days. There’s the dreaded Death Cross of the 50 below the 200 day moving average. What is actually going on is that the 50 is reflecting the downward consolidation since May’s recovery high. The 200 is rising and that means the stock is still in a longer-term uptrend. In other words, the stock may not end up a good trade for many potential reasons, but what the moving averages are doing won’t be one of them.
The August market correction and the September re-test dropped BSX below its orderly channel, which is not surprising. On the still-intact market bounce it has climbed above both moving averages. I’d like to see it hold these and break the channel, thus ending the consolidation.
Here is a weekly view for more perspective. In touching the EMA 90 and bringing MACD to zero (but still positive) it has completely worked off a previous over bought situation.
Okay, while we’re at it let’s do the monthly as well. In 2014 we charted a similar long-term breakout of an extended bottom in Intel. The target was to around 40 and INTC has (so far) made it to 37 (it was around 25 when highlighted). One could read a measurement of 23 into this formation.
Buy Target: 16.75 to 17 (more risky) or a break of the channel above 17.25 that holds for multiple days.
Sell Target: 23 (or anywhere lower that profit is considered acceptable).
Stop Loss: Below 16.50 (strict) or 16.00 and channel bottom (lenient)
A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.
