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business newsReview of Long Opportunities on Market Strength
Capital One, Adobe Systems, and Ross Stores all looked like buys last week, but the market may have other ideas.
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Capital One Financial
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Capital One Financial (COF) is currently on a solid 4% advance today. However, its path has not been straight forward since I mentioned the name back on April 12th. I was initially attracted to COF because of a series of higher lows that it had been putting in since March of this year. In the last five trading sessions it actually broke below recent support, negating my original premise for following the name.
COF has since rebounded and now I am waiting and watching to see if it can take out the double top formed with February and March highs. This area is around $52.95. At this moment, I would not be initiating a position in COF. First, COF reports after the bell today, and that could add a batch of volatility. For a potential trade from these levels, I will want to see COF break above the double top and then holds for a few days. If it is able to hold above $53.00, a position could be started at that level.
The biggest fly in the ointment for me right now with COF is that recent price action has not been very tight. I find myself moving on to other opportunities where the risk reward is better.
Adobe Systems
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Adobe Systems (ABDE) is a name that already has earnings out of the way. I originally called ADBE a diamond in the rough, and it is clearly leaning towards the “rough” side at the moment. When I first looked at the name, ADBE was holding at a flat lining 50 day moving average. While the general indexes have been all over the road map since then, ADBE had drifted consistently lower. While the lessened volatility is nice, the price action is not.
Now hovering below the 50 day, I see no reason whatsoever to deploy capital towards ABDE at these levels. With the big moves seen in the last two days from other individual tech names, ADBE is clearly a laggard. My original buy point for ADBE was $34.70, and I will continue to watch that level.
Ross Stores
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Earnings for Ross Stores (ROST) are still a month out, so there is time to play this name before then. Of the three names reviewed today, ROST has the most attractive pattern. This morning ROST took out yesterday’s high of $72.61, but has since pulled back in a bit. The current play on ROST is simple at this level. If it breaks above and holds today’s high ($72.64), one should consider a position. A stop below yesterday’s low ($72.17) would suffice. Retail has been a leading sector as of late, as shown in the chart of XRT. If ROST is not your cup of tea, run through the plethora of other names and see what names jump out.
Only one of the three names shared last week continues to be attractive right here. That is the name of the game, as we prepare and prepare and then capitalize on only the best of breed. COF and ADBE may still come around, and I will leave them on the watch list for now. ROST is the only name that looks ready to break to the next level.
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