Today's Spotlight Stock is Cirrus Logic (CRUS), which is a member of US Semiconductor sector. This sector has been as strong a leadership trend as exists in the US market of late and CRUS offers another way to participate in that trend.
Long Ideas
| Stock | Symbol | Sector | Current Price | Action Price | Target | Stop | Notes |
|---|---|---|---|---|---|---|---|
| Morgan Stanley | MS | Wall Street | $43.43 | mid-40s | 75 | 40 | 5/5'er, Top 5 ranking in S&P 100 matrix & Wall Street matrix, Weekly Momentum turns Positive. |
| NetFlix Inc. | NFLX | Internet | $160.02 | 148-154 | 182 | 138 | 3 for 5'er, leader in favored INET sector, positive diverger, good R-R, RS vs Mkt buy signal |
| Eagle Materials, Inc. | EXP | Building | $99.58 | 99-102 | 112 | 93 | 5/5'er, Top quartile rank in BUIL matrix, new positive weekly momentum change (after 19 weeks), Earn. 5/18. |
| Rockwell Automation, Inc. | ROK | Electronics | $158.02 | Mid 150s | 170 | 146 | 5 for 5'er, pulled back creating entry point, Weekly Momentum Neg. 10 weeks. |
| Domino's Pizza, Inc. | DPZ | Restaurants | $196.52 | 186-192 | 268 | 172/152 | 5/5'er, Positive Weekly Momentum Change, Bullish Triangle formation, Top 5 rank in REST matrix. |
| Cummins Inc. | CMI | Machinery and Tools | $156.60 | 154 - 158 | 200 | 142 | Favored sector, Triple top completes Shakeout Use pullback to initiate positions, Positive trend RS charts in Xs. |
| MarketAxess Holdings Inc. | MKTX | Wall Street | $188.39 | 186-192 | 234 | 176 | 5/5'er, Positive Weekly Momentum Change, Long-term leadership trend, Investors may purchase through call options. |
| Cullen/Frost Bankers Inc | CFR | Banks | $90.49 | 88-92 | 105 | 82 | 4/5'er, New RS buy signal, PB to improve R-R, Among most improved in BANK matrix. |
| Leidos Holdings Inc. | LDOS | Computers | $52.80 | 51-54 | 63 | 47 | 5 for 5'er, favored Comp sector, above average yield, R-R > 2, pos wkly mom change |
| Arch Capital Group Ltd. | ACGL | Insurance | $95.68 | mid-90s | 111 | 91/84 | 4/5'er, Positive weekly momentum change, "90 to 100" candidate. |
| Cirrus Logic Inc | CRUS | Semiconductors | $64.86 | mid-60s | 95 | 60/56 | 5/5'er, Great risk-reward, Strong sector, Can be used as covered write (Sept. 70 calls). |
Short Ideas
| Stock | Symbol | Sector | Current Price | Action Price | Target | Stop | Notes |
|---|---|---|---|---|---|---|---|
| Diamond Offshore Drilling, Inc. | DO | Oil Service | $14.05 | (15-16) | 10.50 | 17.50 | 0 for 5'er, bottom quartile of unfavored OILS sector, negative market and sector diverger. |
| Simon Property Group, Inc. | SPG | Real Estate | $156.16 | (160-170) | 140 | 182 | 1/5'er, Recent RS Sell Signal, Move to "low attribute" rating for first time since early-2009. |
| Dollar General Corp. | DG | Retailing | $71.72 | (70-74) | 60 | 80 | 1/5'er, Recent RS Sell Signal, Low Ranking in Laggard sector (Retail), Earn. 6/1. |
Removed Ideas
| Stock | Symbol | Sector | Current Price | Action Price | Target | Stop | Notes |
|---|---|---|---|---|---|---|---|
| Danaher Corporation | DHR | Machinery and Tools | $83.28 | 81-85 | 123 | 75 | Still actionable for new long exposure in the low-80s. Those already long may hold here with a stop loss of $75. |
Follow-Up Comments
| Comment |
|---|
| TJX The TJX Companies, Inc. R ($74.19) - Retailing - TJX was a long recommendation last September from the mid-70s and after a weak session on Tuesday this stock is right back to the mid-70s. The stock broke a double bottom at $75 and now sets up a test of additional support in the $72-73 area. Those currently involved may hold here, but we will raise our recommended stop loss point for investors to $71 at this time. |
| DKS Dick's Sporting Goods, Inc. R ($41.21) - Retailing - DKS was a short recommendation earlier this year from the low-50s and after Tuesday's drubbing the stock has now hit our original target for the trade. As well, the stock is 100% oversold on a near-term basis, putting it at greater risk for a bounce or prolonged consolidation in this area. We will cover at least part of any open short position here, and would hedge the remainder with protective calls. The September 44 calls are offered at $1.95 as one suitable hedge for those retaining short exposure here. |
DWA Spotlight Stock
CRUS Cirrus Logic Inc R ($67.00) - Semiconductors - Shares of CRUS are a member of one of the strongest sector trends within the US market today and have moved into the top half of a matrix ranking for that sector (Semiconductors). The stock had a strong session on Tuesday, which included new all-time highs with a triple top break at $67, but which still leaves ample room for the stock to appreciate toward its vertical price objective of $95. CRUS has been a "high attribute" stock since late-2014 and remains so today with an attribute rating of 5. We will look to accumulate long exposure in the mid-60s, and will use a stop loss point of $60 for traders and $56 for investors. Investors may also consider entering CRUS as a covered write, selling the September 70 calls at $3.60 against the long position in the underlying.
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