Trading Rule: When a stock is in Uptrend, then one should buy that stock on declines near long term moving average like 200 dma.
What's the hope when the stock is at 200 dma? - That it will rally like in the chart shown below
Does it happen - do stocks rally like this?
Well, nothing in the market works all the time but this rule does have a tendency to work in a good market environment. So, here are few US stocks standing right at 200 dma. It can be a good case study few weeks down the road on whether they work
1. Costco at 200 dma
Costco is a fundamentally strong stock and as long as market remains strong, it's very unlikely that this stock will not find takers at 200 dma
2. Texas Instruments near 200 dma
The convergence between Texax Instrument stock price and 200 dma has not happened and hence one cannot rule out some more consolidation here before stock can bounce
3. Symantec at 200 dma
Symantec today bounced from 200 dma and hence that's good. The stock started 2017 with a bullish move. I did cover the stock in Nov-Dec 2016
The global cost of handling cyber attacks will surge from $400 billion in 2015 to $2.1 trillion in 2019. Symantec emerging as a Leader
— Deepak Singh (@smarket) November 27, 2016
Symantec is now the leader when it comes to cybersecurity stocks...very bullish positioning pic.twitter.com/I1xjl7ULxk
— Deepak Singh (@smarket) January 4, 2017
Symantec stock made a brilliant move from $24 to $33 and now has pulled back - and it looks like another opportunity to jump in
4. Lows near 200 dma
Lowe's recently announced another increase in its quarterly dividend which now stands at $0.41/share. Home improvement continues to be ecommerce proof business and hence this pullback to 200 dma looks good
5. Starbucks near 200 dma
Starbucks is a solid company and every pullback in the stock will be perceived as buying opportunity as long as market remains on its feet. Stabucks at 200 dma looks good.
The Big question: Will these stocks follow the classic: Buy at 200 dma rule. We will see few weeks down the road
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers