Stocks This Week: Short IBM And Mattel

Photocredit: ASSOCIATED PRESS

The S&P 500 is likely to decline as this week begins so we seek short selling candidates. The S&P gapped up on Friday and is close to a new high. Friday was a projected turning point. I would go with the direction of the market on Monday, likely down. One reason for this conclusion is short-term sentiment. The American Association of Individual Investors poll was posted on Thursday. There were 40.2% bulls, the most since the 41.6% reading on March 3rd. That date preceded a 60-point one-week drop in the S&P. We may see a short, sharp decline in the S&P before the index reaches a new high.

The weekly price cycle for IBM hits a peak as earnings are reported after the close on April 16th. The stock has been closely tracking the cycles; 100% of the buys and 80% of the sell signals have been accurate. Technically, the weekly graph reveals that the share price is nearing resistance and is overbought. Note that April 19th has been one of the weakest days of the year for Big Blue in the month of April, down 82% of the time.

Chart 1

The weekly cycle tops as the company reports earnings.

Cycles Research Investments LLC

Chart 2

Price is up against resistance.

Cycles Research Investments LLC

The weekly Mattel cycle peaks. In the last 12 months, five of six sell signals have been correct. In addition, April 18th has been the high point in the average April for this stock. So, the seasonal cycle and the dynamic cycle will be in agreement from the 18th through to early May. The stock is likely to retrace half of its recent rally to $13.3.

Chart 3

The Mattel cycle has peaked.

Cycles Research Investments LLC

Chart 4

The shares price may fall closer to $13.3.

Cycles Research Investments LLC

 

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