Last week’s picks produced a marginal profit, with positive returns for our value pick Valero Energy and our short pick Nu-Skin Enterprises. Our short-term reversal pick Disney Inc. saw a small loss, though the stock is still a buy according to the system rules.
This week, traders will be hoping for more constructive price action in stocks and a move to the upside of the recent trading range. According to Michael Harris of PAL, the S&P 500 has now been in a trading range for 133 days, a consolidation that has not occurred for 65 years.
Elsewhere, Rob Hanna of Quantifiable Edges mentions that his S&P 500 CBI indicator has hit 15, signalling the possibility of a multi-week bounce. The indicator has a 23-0 track record over the last 10 years, when moving past 11.
Looking to the economic calendar this week and traders will be watching a raft of inflation data out of both the UK and US. The Jackson Hole Symposium will also take centre stage as investors watch for more clues to the timeline of central bank rate rises.
Without further ado, here are this week’s picks:
Unusual Volume System
Tangoe Inc. $TNGO
The unusual volume system identifies stocks experiencing breakouts in volume and has found a potential trade in Tangoe Inc. to be initiated at the open on Monday morning.
Tangoe Inc. is a $300 million technology company that simplifies the management of IT expenses so technology firms can better manage risk and increase productivity.
The stock recently saw a number of analyst downgrades and dropped more than two dollars in price. However, the stocks showed signs of support last week with an abnormal level of bullish volume. Traders should look for the stock to rally this week and make headway on filling the recent gap.
Marwood Value System
JA Solar Holdings Co. $JASO
The Marwood Value System looks for deep value, contrarian-type investments by examining a combination of fundamental ratios and momentum. This week’s pick goes to JA Solar, a small cap Chinese solar company that trades at six times forward earnings.
JASO management had a private bid for the company priced at $9.69 a share, a 20% upside from current prices. If the stock sell-off in China starts to rebound, there could be gains ahead for JASO over the weeks ahead.
Twenty-First Century Fox Inc. $FOXA
This week’s short-term reversal pick goes to Twenty-First Century Fox Inc. The stock is recovering after a sell-off in the media space two weeks ago and could be set to advance, particularly if the broader market moves higher this week.
Terex Corp $TEX
Shares in Terex Corp surged last week on a potential merger deal with Konecranes. However, the stock failed to finish near it’s highs and it was announced that an investigation into the merger would be taking place against the Terex board.
The stock has a volatile history and looks lofty at $26 per share. The stock also has a high level of bearish sentiment on StockTwits and is our favourite short pick this week.
Which stocks are you watching this week?