Blue Chip Hot List Alert

Taking profits in 4 stocks

Profit taking in 4 Hot List Stocks

Almost one month ago, we put all our stops on hold for the Blue Chip Hot List, opting not to allow a market panic to force us out of good stocks at bad prices. That turned out to be the right decision as the market has roared back and more importantly, all 4 of those stocks have roared back.

The 4 stocks we were supposed to sell on August 5: Amazon, Bank of America, Booking, and Boot Barn, have all returned more than 10% since that date and outperformed the S&P 500.

The entire list has also been highly successful in that time, with a +10.6% average return vs. 8.9% for the S&P 500.

However, ahead of Thursday’s official update, I see an opportune time to take profits in 4 of our names and lock in gains for stocks that are either extremely overbought or showing slowing upside momentum.

Please see below for full details on each.

Taking profits in Booking Holdings (BKNG)

Booking has snapped back strongly over the past month but is now up into resistance and saw some selling pressure late last week. More relevant to our philosophy, the relative strength has rolled over suggesting this is no longer a leadership stock. We’ll take our small profit and move on to better opportunities.

Taking profits in Intercontinental Exchange (ICE)

The bar for selling 52-week highs is high but ICE is up 16 of the past 19 days and broke an ascending wedge last Thursday. Short-term risk/reward looks skewed to the downside and there’s no reason to let a great trade turn into a mediocre investment.

Taking profits in Eli Lilly & Co. (LLY)

Similar thinking to ICE applies to LLY where the biotech giant is still in a long-term uptrend. However, after scooping up the dip into support last month, LLY is back to resistance and showing negative momentum divergences. We’ll take a 15% gain and not risk a failure here.

Taking profits in 3M & Co. (MMM)

Finally, we are taking profits in one of our biggest recent winners, 3M. Short-term, the stock broke out from a bull pennant that formed after its huge earnings spike. We’re nearing the end of that measured move and when we zoom out, I see a stock historically stretched from its 200-DMA and coming into long-term resistance. At the very least, I would expect an extended pause here. +39% in 4 months on the list.

Updated List