With the impressive gains for stocks in 2013, it is not surprising that a number of stocks are overbought says MoneyShow’s Tom Aspray, but his weekly scan also identifies several stocks that look positive for the longer term.
The series of new highs in the NYSE Advance/Decline is a positive sign for the stock market’s intermediate-term outlook. However, given the extent of market’s gains, it is increasingly important to concentrate on the buy level for any stock or ETF.
In reviewing the current weekly starc+ band scan of all stocks in the S&P 500, the first ten stocks all closed last week above their starc bands. The Spyder Trust (SPY) closed last week at $148.33, which was 2.3% below its weekly starc+ band at $151.76. The monthly starc+ band for SPY is at $159.19.
These scans can often warn investors not to buy at current levels or to even take some profits. The warnings from the monthly scans are strongest. As I noted in the December 2012, the top stock on the list, Home Depot (HD), had traded near its monthly starc+ band for the past three months.
As it turned out HD peaked at $65.92 the day the article was released and then dropped to a low of $60.21 in late December. The monthly technical studies at the time were positive and now HD is already challenging those highs. Another benefit of the weekly and monthly scans is that they can help one look at stocks that may not already be one’s radar and identify stocks to buy on a correction.
Celgene Corp. (CELG) leads this week’s list as it closed 5.4% above its weekly starc+ band at $94.65. A majority of the stocks on the table are well away from good support levels, and so while they can easily continue higher over the next few months, the risk on new longs at current levels is too high. Several of these stocks do look ready to continue as market leaders for 2013 and therefore should be monitored for a good entry point at a lower level.
Chart Analysis: Life Technologies Corp. (LIFE) was featured in December’s column “5 More Stocks for Your Stocking.” It declined to a low of $48 at the end of the year and then surged over 10% last Friday when the company announced they were looking for a buyer.
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