Friday, October 24, 2014

Friday's Finalists: AAPL, MMM

The survivors from "Friday's Prospects" fell like autumn leaves in the later round of analysis. It was as bloody and tragic as the late stages of a Hunger Games competition.

Two symbols, WDAY and DAL, failed confirmation by moving back within their 20-day price channels. They both come under the Reset Day rules, having broken out the first trading day after earnings.

Three, GCI, WDAY and DAY, have charts that are insufficiently bullish to support a trade based on an upside breakout.

For the others, it comes to my strong preference at this point that my positions be either based on options, with leverage and hedging, or that they be stocks traded under my longer-term rules.

With that in mind, WOOF and SMCI failed because of insufficient open interest to support a trade, and PANW and GD failed because of front-month at-the-money bid/ask spreads greater than 10%.

DPS is the last symbol standing. Since comes under my Reset Day rules, it be need to provide a second confirmation on Monday before its eligible for trading. So it goes on the Watchlist to await its fate.

I turned next to the three symbols on my supplemental list of innovative companies that have given bull signals. KMX failed because of an insufficiently bullish chart, leaving AAPL and MMM in the arena.

AAPL has a slightly higher success rate for bull signals over the past year -- 50%, compared to 40% for MMM. Their charts are equally bullish. Both have highly liquid options.

From those two stocks, from my innovators list, I'm looking for a longer-term trades. I'm putting on my Warren Buffet hat and thinking in terms of years and decades rather than days and months.

From a Buffetian standpoint, the business model, products and attraction of both stocks are readily understandable to the non-specialist. AAPL has more glitter, but MMM has a solid presence in the American household and workplace.

My two quick-and-dirty longer-term telltales are the rank from Zacks Investment Research, and the market pricer relative  to projected earnings and dividends, known as the PEGY.

MMM is ranked sell by Zacks, not the lowest ranking but next up from the cellar. It's PEGY is 1.45, meaning it is priced 45% above the fair price.

AAPL is ranked buy by Zacks, ate the peak of the scale. It has a PEGY of 0.97, meaning it is selling for 3% below the fair price.

It's a marginal call, but I'm going with AAPL as a bull play under my longer-term rules. I'll post an analysis prior to the closing bell today.

-- Tim Bovee, Portland, Oregon, Oct. 24, 2014


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. My very short term volatility trading rules can be read here

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.

Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at

No comments:

Post a Comment