With the S&P recently making new all-time highs, traders are getting more and more excited about buying stocks.
Unfortunately the best buying opportunities came weeks ago, and we're now starting to see some weakness in some popular stocks like Home Depot (HD), Exxon Mobile (XOM) and Netflix (NFLX).
So should you buy Home Depot stocks? - Take a look at this video.
Home Depot (HD) – After a Power Crossover Method buy signal on February 20th, 2014 at $77.57, HD hit our Average Daily Range target of $80.30 in just 3 trading sessions.
The uptrend continued but since making new highs HD has retreated and is starting to show signs of a potential downtrend. With 2 indicators bearish based on our Power Crossover Method rules buyers should be cautious.
We haven't had a signal yet, but if this move lower continues we'll likely have a sell signal in the next few sessions.
Exxon Mobil (XOM) - Just yesterday (3/12/14) XOM had a Power Crossover Method SELL signal.
For this signal to be triggered we need to see a move through $93.54. XOM tends to be a nice mover and has given us some excellent trends after Power Crossover signals.
Let's see if the signal is triggered in the next few sessions.
Netflix (NFLX) – NFLX is up an impressive 18%+ for the year but the stock is starting to show some weakness.
With a Power Crossover Method SELL signal yesterday (3/12/14) we now need to take out $429.68 for a confirmed signal.
The nice thing about this signal is that an Average Daily Range target of $29.96 will bring us right down towards the $400 mark, a level that could be very attractive for traders once we see some momentum to the downside.
Consider Using Options
If you're not interested in shorting these stocks, remember that options are a great alternative. We can buy puts with limited risk that will give us the opportunity to profit from a move to the downside.
It's been over a week since our original post and we're do for an update...
A short signal was triggered in Netflix (NFLX) the day of our initial post. NFLX hit our $29.96 profit target at $399.71 today.
Although Home Depot (HD) gave us a short signal as expected (on 3/17/14), we need to see an order triggered within 3 days of the sell signal according to our Power Crossover Method entry rules.
Since a sell signal wasn't triggered, we now see an indecisive market and will wait for the next trend according to our rules.
Exxon Mobil Corporation (XOM) triggered a sell signal on the day of the post (3/13/2014) and never had the nice move lower that we expected.
Using our Average Daily Range exit strategy, a stop loss was triggered at $95.36 on 3/21/14.