Stocks: The Good, The Bad and The Ugly

Big bases and long-term set-ups

Good morning,

This week we’re taking a different approach and kicking out the bad and ugly stocks. We’re also zooming out, taking the relative strength off the charts, and looking exclusively for stocks with big bases and attractive long-term set-ups.

The stocks I will show here today are listed in alphabetical order and are not necessarily meant to represent a tactical opportunity over the next week or even month. However, these stocks arguably have much more long-term potential, given the long bases they have built.

These picks can be used in concert with short-term set-ups or fundamental research, by patient investors, or just by those of you looking for additional picks outside the Concentrated Equity Buy List.

Finally, for each stock, I am citing the “magic level” which is roughly where long-term resistance sits. A decisive move above that level should put each stock into a potential “new regime” higher.

Without further ado, the (long-term) GOOD.

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AES: AES Corp

AES has been basing since February 2021. It failed to post a weekly close above those levels twice in December and is pulling back to the rising 40-week moving average.
Magic Level: $30

ALL: Allstate

ALL isn’t much above its pre-Covid highs but was resilient in 2022. It likely won’t outperform in a bull market but still has a base that goes back to May 2021.
Magic Level: $145

AMP: Ameriprise Financial

AMP has already broken out from its year-long base, all it has to do is hold the breakout point.
Magic Level: $330

ANET: Arista Networks

ANET’s triangle pattern suggests about $40 of upside if it can resolve higher.
Magic Level: $141

ATO: Atmos Energy

ATO has been pushing up toward its February 2020 highs since December but has so far been unable to post a weekly close above the magic level.
Magic Level: $122

BMY: Bristol-Myers Squibb

Not one, but two great bases here. Not only is BMY pushing up and trying to decisively break out of a base it has been working on since 2016, but that level is also the 1999 highs.
Magic Level: $80