Monday's Finalists: MCK, MSFT, SSS

Out of 12 survivors of the first round of analysis, three stocks made to the finals: The California health-care services company McKesson Corp. (MCK), the Washington software giant Microsoft Corp. (MSFT),  and the New York real-estate investment trust Sovran Self Storage Inc. (SSS).

All 12 survivors were bull signals. (See "Monday's Prospects" for first-round details.)

Four of the twelve that made it into the finals. The others all had charts that were insufficiently bullish to support a trade in that direction. One stock, HOG, appeared on my supplemental list of innovative companies, but I found its chart to also be too bearish for a bull play.

That left the three. The SSS chart is marginally less bullish than the other two. All three have broken above recent highs. SSS, however, is approaching a major peak attained last October, and I would expect resistance at that level. So I set SSS aside.

MCK has a bull rating from Zacks Investment Research, the service I use to provide insight into the fundamentals and Street opinion. MSFT is rated neutral.

However, MSFT is a gigantic company with extremely liquid options perfect for a shorter-term speculative play. An MCK play would have to be in the form of shares because of low open interest on the options.

Liquidity counts for a lot, because it enables me to boost my profit through leverage and hedge against losses through option spreads.

It seems contrarian to be doing so on the day before Apple's big iPhone announcement (Tuesday, 1 p.m. New York time), but I intend to post an analysis of MSFT as a potential bull play prior to the closing bell today.

-- Tim Bovee, Portland, Oregon, Sept. 8, 2014

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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Based on a work at www.timbovee.com.