The monthly chart of Intel (INTC) reveals the very tight range over the past 18 months, line b, which was overcome in October.
Kraft Foods (KFT) moved through a ten-year downtrend, line e, at the end of April 2011. The breakout level was retested in October with the low at $31.88.
What It Means: It is a bit surprising after the sharp gains
over the last month that more Dow stocks are not closer to their monthly Starc+
bands. These four stocks look very strong from the monthly analysis, while the
weekly/daily analysis is currently not very strong.
Stocks are down sharply early Tuesday and the S&P futures are down close to 6% from last week's highs to this morning's lows. Nevertheless, this still looks to be a correction within the overall uptrend.
These four stocks should be attractive buys on any pullbacks with first good support at the midpoint of last month's range. These are meant to be position trades.
How to Profit: For McDonald's (MCD), go 50% long at $90.42 and 50% long at $88.78 with a stop at $83.44 (risk of approx. 6.8).
For International Business Machines (IBM), go 50% long at $178.72 and 50% long at $176.20 with a stop at $164.32 (risk of approx. 7.4).
For Intel (INTC), go 50% long at $23.24 and 50% long at $22.20 with a stop at $21.16 (risk of approx. 6.8%).