(Page 2 of 2)
Click to Enlarge
Pfizer Inc. (PFE) closed 2011 above the early-2011 highs at $21.45. The downtrend from the 2000 highs was broken at the end of March 2011. Despite the recent rise, the stock still yields 3.7%.
- The monthly chart shows that the resistance at current levels is quite strong (line b), and the weekly Starc+ band is at $22.50 with the monthly Starc+ band at $23.31
- RS analysis has just broken its long-term downtrend, line e
- Monthly OBV overcame long-term resistance in early 2011 (line d) and has just moved back above it
- There is minor support at $21 with stronger support in the $19.80-$20.30 area
- The 61.8% retracement resistance from the August 2011 lows is at $18.69
Exxon Mobil Corp. (XOM) is not far below its major downtrend (line e) and the 2011 highs at $88.23. The highs in 2009 were at $96.12. The current yield is 2.2%.
- The monthly flag formation, lines e and f, has bullish long-term implications
- A completion of the triangle would give upside Fibonacci targets in the $103 area
- RS analysis has just moved through short-term resistance at line h, which is a positive sign
- A similar breakout in 2007 (line g) preceded a sharp move to the upside
- The monthly OBV is just slightly above its weighted moving average (WMA) and has good support at line j. A move through the long-term downtrend, line i, would be very positive
- Initial support stands at $82-$82.60 with stronger support at $80.50
What It Means: This regular monthly analysis of the Dow stocks highlights the most overbought or oversold stocks, however, longer-term analysis can be quite valuable, as has been the case with Pfizer.
Often times, the most overbought stocks also are the ones that are outperforming the S&P 500 (positive RS analysis), as was the case with McDonald’s Corp. (MCD). RS analysis can often identify the year’s star performers (see “The Year’s Most Reliable Indicator”).
How to Profit: As noted below, I have had previous recommendations in Pfizer Inc. (PFE) and Kraft Foods (KFT), and now have two new recommendations:
- For Home Depot Inc. (HD), go 50% long at $40.04 and 50% long at $37.44 with a stop at $35.12 (risk of approx. 9.2%).
- For Exxon Mobil Corp. (XOM), go 50% long at $82.28 and 50% long at $80.68 with a stop at $73.74 (risk of approx. 9.4%).
- For Pfizer Inc. (PFE), as previously recommended, buyers should be long at $17.03. Raise the stop to $17.88.
- For Kraft Foods (KFT), buyers should be 50% long at $34.54 and using a stop at $33.52.
- For International Business Machines (IBM), buyers should be 50% long at $178.72 with a stop at $174.32.
- For Intel (INTC), buyers should be 50% long at $23.24 with a stop at $22.34.
- For Coca-Cola Co. (KO), buyers should be long at $66.24 or better with a stop at $64.22.
- For Johnson & Johnson (JNJ), buyers should be long at $62.88 with a stop at $61.74.
- For AT&T Inc. (T), buyers should be long at $28.54 with a stop at $28.22.