«

»

Oct 27

Entering Long Microsoft ($MSFT), Eaton Corp ($ETN)

I’ve seen a few mentions in the last week or so of deteriorating breadth and fewer new highs despite the market advance, as worrying signs of potential market weakness, but for now I am still seeing plenty of stocks with promising setups. Here are two new long entries for Monday’s open:-

Microsoft ($MSFT)

This isn’t the world’s prettiest chart near-term but the fact is a close above $35 following its earnings announcement was going to be enough to trigger this entry, being a 50-day high and signaling a breakout from its most recent congestion area. A break of the July high would certainly have made it more impressive but wasn’t necessary to enter. The second chart demonstrates why. Looking at a weekly line chart for additional clarity, the trend here is clear, and that’s a weekly closing high, the highest since December 2007.

AlphaCapture

AlphaCapture

Our initial stop will be the 9/24 close of $32.46. Assuming we don’t have an immediate reversal of this breakout we should soon be able to move it up to the subsequent higher lows this month of $33.00 and $33.72.

 

Eaton Corp ($ETN)

This is a fairly straightforward breakout entry. $ETN powered to an all time high on Friday post-earnings, and looks to have finally overcome a $6 range that has held it for the last 6 months. The 10/9 close of $65.65 is an ideal stop, being the most recent higher low with the 20 and 50-day MA’s above and the 200-day approaching.

AlphaCapture

 

 

 

 

8 comments

Skip to comment form

  1. John Kelley

    Hello Jon,

    Would you just place a trailing stop at say 8% of your opening entry on Monday for MSFT?

    1. Jon Boorman

      Apologies, I missed off a line about the stop, I’ll add that now.
      Our initial stop will be the 9/24 close of $32.46. Assuming we don’t have an immediate reversal of this breakout we should soon be able to move it up to the subsequent higher lows this month of $33.00 and $33.72.

  2. John Kelley

    Excellent. Thanks for the update. I am really trying to understand and implement your way of thought.

    1. Jon Boorman

      Thanks John, if you haven’t already, read through the FAQ page, you’ll pick up a lot of other pointers there rather than having to trawl through a lot of old posts.

  3. VP

    Thanks Jon for the write-up.

    I just checked ETN and it seems it could be in an ascending wedge formation on the Daily. I am assuming you disagree with this since you took a long position? Obviously, that formation breaks if it continues higher and thus will be very bullish. I wanted to bring this to your attention.

    Thanks

    1. Jon Boorman

      I just go by price trends. It’s at an all time high which by any reasonable definition makes it a strong uptrend.

  4. John Kelley

    I’ve entered a position in MSFT today and hope to learn something from this type of investing.

    Could you tell me what your stop would be currently for TOT? I bought TOT earlier this year only to sell it flat but I would like to get back on board. From reading your FAQ’s I believe that I can just simply buy TOT on the open market without waiting for some type of pull back for entry. Thanks in advance -

    1. Jon Boorman

      The stop on TOT is currently a close below $57.85, and you could certainly enter it here.
      I’m all for buying new highs or breakouts, I don’t need a stock to pullback to enter. I’ll often buy a stock when it’s emerging from a consolidation within an uptrend, but again I try to ensure we’re entering on strength not on weakness, so I’ll look for a series of higher highs or rising on increased volume.

Leave a Reply