The market managed to stop Wednesday’s strong selloff with a respectable bounceback on Thursday, but, the issue still hangs in the balance. The volume behind the gain was modest, and the indices are still within easy reach of a technical breakdown.
The e-commerce giant said it was acquiring online pharmacy PillPack, sending traditional pharmacy stocks like CVS Health (NYSE:CVS), Rite Aid (NYSE:RAD) and Walgreens Boots Alliance (NASDAQ:WBA) careening.
None of those names are well-suited for trading now though … too much volatility makes it impossible to get a read on what’s to come.
Rather, the best bets from here are Sherwin-Williams (NYSE:SHW), Regeneron (NASDAQ:REGN) and Allstate (NYSE:ALL), each of which are relatively immune to the market’s normal recycling of hysteria.
There’s nothing sexy about Sherwin-Williams, even when factoring in that it’s more than just paint. It’s also an industrial coating specialist, which is an industry that’s well-positioned to capitalize on broad economic growth.
Yet, SHW stock is compelling here, even if only for technical reasons.
• The bears have had ample opportunity to beat Sherwin-Williams shares down for weeks now. They just haven’t. With Thursday’s gain, the stock’s back above a recent ceiling around $403.86, extending a rally that has become pretty well developed.
• Also note that we’re still seeing more bullish volume than bearish volume, even if that trend is erratic.
• While “boring,” this stock has an impressive long-term track record. SHW shares are up more than 200% over the course of the past six years, and the momentum still seems as intact as it ever has.
For a multitude of reasons, the summertime is a bullish time of year for biotech stocks even if it’s a disappointing time of year the overall market. To that end, Regeneron Pharmaceuticals is as much of sector-timing play as it is a stock-specific trade.
Even on a stock-specific basis though, this chart looks like it’s in breakout mode.
• The monthly chart’s selloff since July of last year is daunting, but the reversal that’s materialized since May is a text book reversal. May’s bar was an oddly short doji bar, indicating a pivot, and June’s bullish follow-through is confirmation of that pivot.
• The daily chart has easily pushed past its 50-day moving average line, and not looked back.
• There’s also plenty of volume behind the past several days’ worth of gains. And, that bullish volume appears to be growing.
Allstate Corp (ALL)
Not every worthy trading prospect is a bullish one right now though. Like many other insurers of late, Allstate is fighting a losing battle, and just suffered tough blow in a vulnerable state. Insurers, as a group, are also falling out of favor against the back drop of rising rates and the foreseeable future of interest rates.
• As of mid-June, ALL shares dished out a “death cross.” That’s a cross of the 50-day moving average line below the 200-day moving average line, suggesting the weakness has become a significant trend.
• Thanks to Wednesday’s plunge, two key support levels — at $91.61 and $91.05 — have been broken. Thursday’s gain only partially unwound that blow. The shape of the monthly chart shows a gradual, ongoing downside acceleration. One more bad day could push Allstate over the edge.
• The daily chart also shows that the volume behind the recent “up” days has been lower than the “down” day volume.
— James BrumleyThe Ultimate Marijuana Stock to Go Ballistic in the Next 90 Days [sponsor]
Recreational marijuana is set to become legal in Canada this fall. And the result will send this stock soaring. If you act quickly, before most Americans catch on, you, could turn every $10,000 you invest into $30,000, $40,000, $50,000, or more. This Special Report reveals the No. 1 Marijuana Stock to Buy Now - Read It Here.
Source: Investor Place