Are you frustrated trying to buy and sell stocks in today’s volatile and headline-driven market? To position with stronger success, look to diversify risk and hedge your portfolio with large-cap stocks setting up for meaningful moves up and down using the monthly chart.
Wall Street’s risk appetite from one day to the next goes hand-in-hand with the latest breaking news on the coronavirus. And just how the pandemic plays out other than POTUS believing hot weather will save us, isn’t known. That’s a fact.
Still, if history is any sort of indicator, there’s reason to be optimistic someone smarter than our country’s own ‘stable genius’ will ensure the coronavirus dies a quiet death.
Right now though, well-positioned monthly charts in two large-cap stocks are ready to break out and break free of today’s erratic price behavior regardless of the headlines. Likewise, a similarly meaningful short hedge is worth putting on the radar and maybe in the portfolio for profitable diversification in the event this time doesn’t prove different.
Streaming video-on-demand giant Netflix (NASDAQ:NFLX) is the first of our large-cap stocks that has put in the work on the monthly chart and in position for buying. Shares have moved firmly higher after a brief ‘pause and rewind’ following the outfit’s earnings topper in late January. But Netflix is anything but finished for bullish investors.
The price strength in Netflix has just now resulted in shares clearing a pattern mid-pivot within its 1.5+ year old corrective base this week. Coupled with a bullishly-trending stochastics still in neutral territory, the buy decision for this large-cap stock is an easy one.
Netflix Stock Strategy: Buy shares of Netflix today. I’d advise setting a stop if required at $357. This keeps risk contained to about 7%. On the price chart this exit also gives enough leeway for a handle consolidation to form with symmetry and without overstaying one’s welcome if the pattern deteriorates for the worse.
Oracle (NASDAQ:ORCL) is the next large-cap stock that has caught our attention on the monthly price chart. If investors appreciate the trend is your friend, Oracle is a stock to relish. As the monthly chart shows, shares have been a steady ally for bulls since the financial crisis bottomed in 2009. And now the trend is looking even friendlier.
Since December 2018’s broad-based market correction established a technically well-supported double-bottom in ORCL stock, shares have been consolidating in the upper half of its bullish channel pattern. The observation is a rally through the smaller angular resistance line could lead to this large-cap stock’s trend entering a more determined phase of bullish behavior.
Oracle Stock Strategy: I’d suggest buying this large-cap stock under two conditions. First, shares need to clear $56.24. This entry waits for the channel’s minor downtrend line to be broken and for Oracle to trade 1% above the high of December’s pivot bottom candlestick. The purchase should also wait for Oracle’s stochastics to signal a bullish crossover.
For containing downside exposure and because this strategy waits for additional confirmation, I’d set an initial blended stop-loss below $54. In our estimation that’s ample room off and on the price chart as the buy is predicated on increased share strength from this large-cap stock. Likewise, I’d look to take partial profits above the existing channel and rally to fresh highs above $62.
Walmart (NYSE:WMT) is the last of our large-cap stocks signaling something big for investors. This time, however, the technical picture hints shares of the retail giant are going on sale. Interestingly enough, the stock is in position for shorting today despite this week’s well-received announcement from management it isn’t cutting guidance similar to fellow large-cap stock Apple (NASDAQ:AAPL). Hmm, maybe a bearish update by Walmart is in store for investors?
On the provided monthly chart readers can see WMT stock put together a bearish topping pattern during the last two months of 2019. Further, with the formation challenging layers of Fibonacci-based resistance there’s additional technical evidence we’re looking at a meaningful top in shares.
Now and following January’s bearish price confirmation and backed by an overbought stochastics crossover, Walmart is in position for shorting into this week’s rally in anticipation a larger corrective cycle and possible bear market are just beginning.
Walmart Stock Strategy: This large-cap stock is a short right now. I’d recommend a blended stop above $123.69 if needed and only if this large-cap stock’s stochastics signals a bullish crossover. Bottom-line, this strategy contains risk to as little as 5% and only closes the position if shares make a sufficiently strong technical case this time is truly different.