The impressive stock market gains this year forces investors to decide whether to hold on for even higher prices, or whether to book some gains. MoneyShow’s Tom Aspray uses his unique starc band analysis to find those S&P 500 stocks that are now in the highest risk buy zones.
The sharp gains last week and new closing highs in the major averages has turned the focus once again on the Advance/Decline lines, as they have not yet confirmed the new highs in a convincing manner.
The daily OBV analysis does look stronger on all, except the small cap iShares Russell 2000 (IWM) which is still diverging sharply from prices. The weekly analysis does look much stronger and the futures are higher again in early trading on Monday.
Since there are only four days left in the month, I chose to run the monthly starc+ band scan of all stocks in the S&P 500 to see how many were trading above their starc+ bands. There were thirteen stocks that closed last week above their monthly starc+ bands.
These scans can often warn investors not to buy at current levels or to even take some profits. In my December 2012 review Home Depot (HD) was the top stock on the list, as it had traded near its monthly starc+ band for the prior three months. As it turned out, HD peaked at $65.92 the day the article was released and then dropped 8.6% in the following three weeks.
McKesson Corporation (MCK) tops the list, as it closed Friday 12.9% above its monthly starc band. I have also included what % these stocks are trading above their 50-day moving averages, as over 73% of the S&P 500 stocks are currently above their 50-day MAs. For example, MCK is 13.5% above its 50-day MA.
In comparison, the Spyder Trust (SPY) closed last week at $180.81, which is 3.4% below its monthly starc+ band at $186.33. SPY closed 4.3% above its 50-day WMA. Let’s look at the most interesting charts based on the OBV, as well as the multiple time frame RS analysis, including one that warned last month that it was a high-risk buy.
Chart Analysis: McKesson Corp (MCK) is a $37.6 billion dollar wholesale drug company that started moving above its monthly starc+ band in January 2013.
- Since then, it has repeatedly tested its starc+ band and looks ready to close above it for the second month in a row.
- The weekly analysis shows that MCK has been bumping into the starc+ band for the past nine weeks.
- The monthly relative performance has been in a solid uptrend since the middle of 2009, as it has been a market leader, up 76% over the past year.
- The monthly OBV moved above its WMA at the end of 2012, but is still below the May 2007 high, line c.
- The weekly RS and OBV analysis show no signs yet of a top.
- There is initial weekly support at $154-$156 and the projected monthly support for December is at $152.
Boeing Co. (BA) has been a highly-touted stock over the past several months, as it has gained almost 30%.
- In October it closed $11 above its monthly starc+ band and looks ready to repeat this in November.
- BA hit a high last week of $142, but closed the week at $135.97, which was 4.2% below the highs. The weekly low was $131.20.
- The relative performance broke its downtrend from the 2007 high, line e, in March.
- The OBV broke out at the same time, as the resistance, at line g, was overcome.
- The high from 2007, line f, was overcome in October.
- The weekly technical studies have turned down, but did confirm the highs.
- There is first support now in the $130-$131.20 area.
- For December, the monthly projected resistance is at $147.60.
NEXT PAGE: Two More High-Risk Stocks