Hey 5-Star Trader,
What a busy week for the market! The Federal Open Market Committee (FOMC) met, and a whole slew of earnings reports were released. All this action has created a frenetic market environment, so for the remainder of the week I’m revisiting my watchlist to see who is still a good buy.
What Tickers Are On My Watchlist?
When building my watchlist, I like to include tickers from different industries. This week, my top three sectors include tech, staples, and housing/discretionary.
Tech Sector: Microsoft (MSFT)
I believe the “spooking” going on in the market will deliver some decent tech buying opportunities, especially since these kinds of moves have been pretty rare. I started picking up more MSFT a few days ago during the after-hours session at $275 and will probably add more. I am a huge fan of MSFT and have been for a long time. I buy more shares of this stock every time it falls to the 50 simple moving average (SMA) on the daily chart. This time, I got the rare chance (one that has not occurred since the Covid-19 crash) to buy it at the 200 SMA — a major discount!
Levels: I really need to see MSFT hold $275 because if it can’t, $250 is the next buy zone. I am buying at $275 and would buy at $300 as well, but don’t be surprised when it hits resistance at $320. It will probably take a while to get the previous momentum back and will probably chop around. My target is $325, but I would definitely not sell it when it hits. This is a long-term hold for me.
Disclosure: Most definitely long MSFT!
Staples Sector: Costco (COST)
Most staples stocks are up on their highs, and trying to rotate into safety at this point is a move made way too late. However, that is not the case with Costco. This week Costco was down 16% from highs, sitting nicely on support on the weekly chart at the 34 exponential moving average (EMA) and is nearing the 200 SMA on the daily chart. Yes, the short-term daily chart trend has shifted, but the weekly trend remains intact. COST has seen rising earnings per share (EPS) the past three quarters. A solid feat, especially in light of inflation.
Levels: I like the current price for a buy and wouldn’t mind buying up to around $500. My initial target is $530-$540, which is where I have resistance.
Disclosure: Long COST & buying more
Housing/Discretionary Sector: Lowes (LOW)
Housing stocks have gotten hit with news of rising mortgage rates, as rates on a 30-year mortgage have already increased about a point which is a pretty substantial difference. Homebuilders like D R Horton (DHI), PulteGroup (PHM), and KB Home (KBH) have had a bit of a rough month, along with Lowes (LOW) and Home Depot (HD). However, millennials are getting married and in need of those houses in the suburbs. If they can’t buy a nice one (which, let’s get real, I don’t know any millennials who buy new houses) they are going to buy older ones and do their own remodels with stuff they buy. LOW is slightly stronger than HD, but I own both and like both here.
Levels: Buyers beware of resistance at $250.
Disclosure: Long both HD and LOW & buying more
Want a freebie? Join me on February 2nd, for a free webinar. There I show you how I’m able to anticipate trend shifts through choppy market conditions!