Retracements and Moving Averages as Strategic Signals

RELATED QUOTES

SymbolPriceChange
AXP79.86-0.11

Prior to last week's 3.6% bounce in the market (S&P 500), it had been down -8.9% from the highs on 9/14/12 to the lows on 11/16/12.

The S&P, along with the other major indexes, and countless numbers of stocks rebounded sharply after falling below their 50-day and 200-day moving averages.

If you're bullish on the market, you likely see this as a sign that the selling is over.

If you're bearish on the market however, you probably see this as a short-covering rally before the market heads lower again.

Only time will tell which camp is right. And quite frankly, as it relates to individual stocks, it might turn out that both are correct.

For some stocks, the recent bounce is providing another opportunity to sell stocks at a higher price -- whether that's to establish new shorts or to finish up the end-of-year tax selling to ensure one can take advantage of what could be the last time capital gains taxes are this low for a while.

And for others, it was the correction they've been waiting for to get in on some of their favorite stocks.

Retracements and Moving Averages

In general, stocks that drop below their 50-day and 200-day moving averages are looked at as potentially bearish, while stocks that breakout above them are considered potentially bullish. Traders and investors will often key in on these levels as places to buy and sell stocks.

Another often used indicator for buying and selling are retracements. Common retracement levels, as defined by Fibonacci, come in at 38.2%, 50% and 61.8%. These levels are looked at strategically, like the moving averages, as places to either get long or short.

With this screen (2 screens actually) we're going to combine both of these indicators to find stocks that look like bearish retracements and others that look like bullish set ups.

Bearish Screen

For the bearish set up, I'm looking for stocks that have:

  • retraced less than 61.8% of the drop that preceded it
  • and that are trading just under their 200-day moving average
  • with a Zacks Rank of greater than or equal to 3 (Hold, Sell, or Strong Sell)

Bullish Screen

For the bullish set up, I'm looking for stocks that have:

  • retraced more than 61.8% of the drop that preceded it
  • and that are trading above their 200-day moving average (and preferably their 50-day as well)
  • with a Zacks Rank of less than or equal to 3 (Strong Buy, Buy, or Hold)

Of course, nobody should use just the retracement levels and moving averages as their only reason for getting long or short; the Zacks Rank aside.

But these are two popularly watched indicators, and they can help you identify key points as to when a stock is ready to turn around or keep on going in the same direction.

Below are 6 stocks (3 from each of the bullish and bearish screens).

Watchlist to Buy

CHD - Church & Dwight Co. Inc. -- Soap and Cleaning Products Industry. Zacks #2 Rank or Buy. CHD has retraced nearly 100% from of its levels on 9/14/12, when the S&P hit its highs. CHD's own high came just before that on 7/17/12, and has so far retraced 50% of that move.

RLJ - RLJ Lodging Trust -- Real Estate Investment Trust (:REIT) that focuses on full service hotels. Zacks #3 Rank or Hold. After plummeting below its 50-day and 200-day moving averages, it has since surged back above them both and is currently trading within 4% of its 52-week high.

PACW - PacWest Bancorp -- In the Banks-West Industry. Zacks #3 Rank or Hold. Top 23% of Zacks Ranked Industries. Has retraced nearly 100% of its broader pullback and is also trading within 4% on its 52-week high.

Watchlist to Sell

AXP - American Express Company -- Financial Services Industry. Zacks #3 Rank or Hold. After dropping more than -13% over the last few months, it has struggled to retrace less than half of that and is trading right at its 50-day and 200-day moving averages.

BCR - C.R. Bard Inc. -- Medical/Dental Supply Industry. Zacks #3 Rank or Hold. Bottom 30% of Zacks Ranked Industries. Has retraced less than 38.2% from its high on 7/5/12 and has come back up to just under its 200-day moving average.

GGG - Graco, Inc. -- Industrial Machinery. Zacks #5 Rank or Strong Sell. Bottom 16% of Zacks Ranked Industries. Has made a 50% retracement of its recent pullback, but is still trading under both its 50-day and 200-day moving averages, with the 50-day having just crossed below the 200-day last week (bearish crossover).

Get the rest of the stocks on this screen and start using retracements and moving averages in your own stock picking.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks' portfolios and strategies are available at: http://www.zacks.com/performance.

AMER EXPRESS CO (AXP): Free Stock Analysis Report

BARD C R INC (BCR): Free Stock Analysis Report

PACWEST BANCORP (PACW): Free Stock Analysis Report

GRACO INC (GGG): Free Stock Analysis Report

RLJ LODGING TR (RLJ): Free Stock Analysis Report

CHURCH & DWIGHT (CHD): Free Stock Analysis Report

Zacks Investment Research



More From Zacks.com

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...

Explore Related Contents

  • SK Hynix CEO says will consider fresh bid for Toshiba chip unit stake
    SK Hynix CEO says will consider fresh bid for Toshiba chip unit stake Reuters - 2 hours 15 minutes ago

    SK Hynix Inc will consider making a fresh bid for Toshiba Corp's flash memory chip business should the Japanese conglomerate offer more of it for sale, the chief executive of the South Korean chipmaker said on Thursday. Toshiba initially put up … More »

  • Plantation commodity exports rise to RM122b Business Times - 2 hours 16 minutes ago

    PUTRAJAYA: Malaysia raked in RM121.99 billion from plantation commodity exports last year, thanks to slight improvement in the average pricing of palm oil, rubber and cocoa. “Last year’s achievement was 4.2 per cent better than RM117.10 billion in … More »

  • TM targets 4pc revenue expansion this year Business Times - 2 hours 16 minutes ago

    KUALA LUMPUR: Telekom Malaysia Bhd (TM) is targeting up to four per cent revenue growth for the financial year ending December 31 2017, from RM12.06 billion revenue recorded last year, despite an increasingly challenging business environment. Its … More »

  • Australia's Crown profit up but high-roller revenue falls
    Australia's Crown profit up but high-roller revenue falls AFP News - 2 hours 17 minutes ago

    Australian mogul James Packer's Crown Resorts reported a sharply higher second-half net profit Thursday after scaling down a Macau joint venture which offset weaker turnover from high rollers. The casino operator, which has been hit by softening … More »

  • Crude oil rises after report shows drop in stockpiles
    Crude oil rises after report shows drop in stockpiles Reuters - 2 hours 28 minutes ago

    Oil futures rose nearly 1 percent on Thursday after data released by an industry group showed a surprise decline in U.S. crude stocks as imports fell, lending support to the view that a global glut is ending. Brent crude (LCOc1) was up 48 cents, or … More »

  • Ringgit higher versus greenback Business Times - 2 hours 29 minutes ago

    KUALA LUMPUR: The ringgit was higher at today’s opening on positive market sentiment that provided it the support, a dealer said. At 9 am, the local unit was traded at 4.4480/4520 against the greenback from 4.4510/4540 on Wednesday. A dealer said … More »

  • Adelson's Sands Missing Stock Rally as Rivals Pull in VIPs (1) Bloomberg - 2 hours 36 minutes ago

    The so-called mass market -- casual gamblers who visit Macau’s casinos as much for the replicas of European landmarks as the baccarat tables -- has been overshadowed the past three months by a revival in VIP custom, data compiled by Bloomberg … More »

  • BOJ's Kiuchi warns against raising bond yield target Reuters - 2 hours 58 minutes ago

    By Leika Kihara KOFU, Japan (Reuters) - Dissenting Bank of Japan board member Takahide Kiuchi warned that raising the bank's bond yield target near-term would be problematic as inflation remains well below ... … More »

  • 'Le Cost Killer' Ghosn quits Nissan CEO post, stays chair
    'Le Cost Killer' Ghosn quits Nissan CEO post, stays chair AFP News - 3 hours ago

    Nissan chief executive Carlos Ghosn, credited with reinventing the once nearly bankrupt Japanese automaker, said Thursday he is quitting his post to focus on overhauling rival Mitsubishi Motors, but will stay on as chairman. Ghosn, 62, who also … More »

  • China State Fund's Broker Says It's Buying Hong Kong Stocks (1) Bloomberg - 3 hours ago

    Guotai Junan Securities Co. and its Hong Kong unit have been providing the social security fund with investment advice and trading services for mainland and Hong Kong stocks, Yim Fung, chairman and chief executive officer at Guotai Junan … More »

  • First stab at acquisition by Australia's South32 hits competition hurdle
    First stab at acquisition by Australia's South32 hits competition hurdle Reuters - 3 hours ago

    The first attempt at an acquisition by Australia's South32 (S32.AX) following its spinoff from BHP Billiton (BHP.AX) (BLT.L) has raised competition concerns over control of the local coking coal market. Australia's chief competition regulator on … More »

  • Nobel-winning economist Kenneth J. Arrow dies at 95
    Nobel-winning economist Kenneth J. Arrow dies at 95 Associated Press - 3 hours ago

    Kenneth J. Arrow, the youngest-ever winner of a Nobel prize for economics, whose theories on risk, innovation and the basic mathematics of markets have influenced thinking on everything from voting to ... … More »

  • Ctrip Forecasts Sales Surge as Travel Giant Tightens China Grip Bloomberg - 3 hours ago

    China’s largest online travel operator is predicting revenue growth of 40 to 45 percent in the March quarter, which encompasses the peak Lunar New Year travel period, after reporting results that outpaced analysts’ projections. Revenue grew 76 … More »

  • Qantas profit dives 7.5%, fares squeezed
    Qantas profit dives 7.5%, fares squeezed Bloomberg - 3 hours ago

    Chief Executive Officer Alan Joyce, who is in the final six months of a three-year turnaround plan, said confidence is returning in the Australian economy and that trend would continue in the second half of the year. After ditching some unprofitable … More »

  • Nissan CEO Carlos Ghosn to step down, stay as chairman Business Times - 4 hours ago

    TOKYO: Nissan boss Carlos Ghosn will step down as chief executive at the Japanese automaker, but will remain chairman as he focuses on its alliance with Renault and Mitsubishi, the company said Thursday. Ghosn, who is widely credited with turning … More »

  • Tesla says Model 3 on track for volume production by September Business Times - 4 hours ago

    SAN FRANCISCO: Tesla Inc said on Wednesday its mass-market Model 3 sedan was on track for volume production by September, encouraging investors who see the electric vehicle as the avenue to profitability for the young company. “According to our … More »

  • Dorsey's Square reports smaller-than-expected quarterly loss
    Dorsey's Square reports smaller-than-expected quarterly loss Reuters - 4 hours ago

    The San Francisco-based company, which is run by Twitter Inc (TWTR.N) Chief Executive Jack Dorsey, posted a quarterly loss of 4 cents per share on revenue of $452 million. Analysts on average had expected a loss of 9 cents per share on revenue of … More »

  • Solar Capital meets 4Q profit forecasts Associated Press - 4 hours ago

    On a per-share basis, the New York-based company said it had profit of 42 cents. The results met Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was ... … More »

  • SP Plus posts 4Q profit Associated Press - 4 hours ago

    The Chicago-based company said it had profit of 43 cents per share. Earnings, adjusted for one-time gains and costs, came to 52 cents per share. The parking facility management company posted revenue of ... … More »

  • U.S. oil rises after report shows drop in stockpiles
    U.S. oil rises after report shows drop in stockpiles Reuters - 4 hours ago

    TOKYO (Reuters) - U.S. oil futures rose nearly 1 percent on Thursday after data released by an industry group showed a surprise decline in U.S. crude stocks as imports fell, lending support to the view ... … More »

  • CoreLogic beats Street 4Q forecasts Associated Press - 4 hours ago

    On a per-share basis, the Irvine, California-based company said it had profit of 4 cents. Earnings, adjusted for one-time gains and costs, were 56 cents per share. The results exceeded Wall Street expectations. ... … More »

  • Tesla swings to loss in 4Q, says Model 3 on target
    Tesla swings to loss in 4Q, says Model 3 on target Associated Press - 4 hours ago

    Unable to string together profitable quarters, electric car and solar cell maker Tesla Inc. reported a loss for the last three months of 2016. Tesla posted its first profit in three years in last year's ... … More »

  • UK car production reaches nine-year high in January Reuters - 4 hours ago

    British car production rose by an annual 7.5 percent in January to hit its highest since 2008, as strong demand for exports compensated for a decline in demand at home, an industry body said on Thursday. Vauxhall's Ellesmere Port plant in northern … More »

  • Tokyo stocks open lower AFP - 4 hours ago

    Tokyo stocks opened lower Thursday as the yen strengthened against the dollar and investors contemplated the minutes from the US Federal Reserve's latest meeting. The benchmark Nikkei 225 index slipped ... … More »

  • Alleghany posts 4Q profit Associated Press - 5 hours ago

    The New York-based company said it had profit of $4.50 per share. Earnings, adjusted for non-recurring costs, came to $7.02 per share. The property and casualty insurance provider posted revenue of $1.46 ... … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.27+0.02+5.88%
    N21.SI
    1.025+0.045+4.59%
    G13.SI
    0.193+0.017+9.66%
    40F.SI
    1.755+0.220+14.33%
    S51.SI
    0.385+0.025+6.94%
    5ME.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.35+0.07+27.27%
    BQF.SI
    0.13+0.02+17.12%
    UV1.SI
    0.53+0.07+15.22%
    BLR.SI
    1.755+0.220+14.33%
    S51.SI
    0.168+0.020+13.51%
    5PD.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.139-0.040-22.35%
    AZR.SI
    0.40-0.08-16.67%
    BLA.SI
    0.094-0.014-12.96%
    5DL.SI
    0.179-0.020-10.05%
    BDN.SI
    0.205-0.015-6.82%
    F13.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.4145+0.0013+0.09%
    USDSGD=X
    1.4941+0.0026+0.17%
    EURSGD=X
    1.7601+0.0001+0.01%
    GBPSGD=X
    79.9460-0.224-0.28%
    SGDJPY=X
    5.4849-0.0052-0.09%
    SGDHKD=X
    3.1442-0.0066-0.21%
    SGDMYR=X
    9,443.1748-45.6699-0.48%
    SGDIDR=X
    4.8625-0.0031-0.06%
    SGDCNY=X
    1.0875-0.0003-0.03%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,238.60+5.30+0.43%
    GCJ17.CMX
    17.98+0.02+0.14%
    SIH17.CMX
    89.91-1.82-1.99%
    ^XAU
    2.72-0.01-0.44%
    HGH17.CMX
    54.07+0.48+0.90%
    CLJ17.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.910.00
    ^FVX
    2.42-0.01
    ^TNX
    3.040.00
    ^TYX