Stock Picks: PPG and COL

The S&P 500 (SPX) have bounced back yesterday, March 5, as it went as high as 2728.09. It did so, however, with below average volume. This suggests that market participants are starting to lose interest to buy at this level. Without considerable volume in the next few days, the index is likely to resume its drop.

As SPX begins to lose its bullish steam, let’s look at names that are near firm support levels.

ORLY – O’Reilly Automotive Incorporated

O’Reilly Automotive Incorporated (ORLY) is a leading specialty retailer of aftermarket auto parts, tools, supplies, equipment and accessories in the United States. Aside from carrying brand-name merchandise such as Armor All, Bosch, Castrol, Prestone, STP, Turtle Wax, and Valvoline, the company’s stores also offer a wide range of motor shop services and programs like recycling of used oil, oil filters, and batteries; battery diagnostic testing; and electrical and module testing; among others. Originating from one single store in Missouri in 1957, they have now grown to 5,021 locations in California, Missouri, Georgia, Florida, North Carolina, Oklahoma, Wisconsin, Kansas, Nevada and Connecticut.

ORLY started its uptrend in February 2009 when it conquered the 30 resistance level with extremely heavy volume. Since then, the stock has been creating a series of higher highs and higher lows until it topped out in July 2016 when it went as high as 292.84. The stock then created a bearish head and shoulders pattern when it generated a lower high of 286.57 in December 2016. It then broke below 240 support and dived to as low as 169.43 in July 2017.

Technical analysis show that ORLY is creating a bullish higher low setup at 240. This comes after the target of the head and shoulders structure was achieved when the stock went below 170 in July 2017. The sequence of events tells us that ORLY is about to ignite another bull run.

The strategy is to buy as close to 240 support as possible. If bulls defend this higher low, the stock will use it to breach 280 resistance. Once 280 is taken out, the stock has a clear path to our target of 360. The process may take more than a year.

Weekly ORLY Chart

Monthly ORLY Chart

As of this writing, the O’Reilly Automotive Incorporated stock is trading at 246.58.

Summary of Strategy

Buy: As close to 240 as possible.

Target: 360

Stop: 237

OXY – Occidental Petroleum Corporation

Occidental Petroleum Corporation (OXY) is a Fortune 500 oil and gas exploration and production company. Aside from oil and gas, the company also has two other enterprise segments: Chemical, as well as Midstream and Marketing. The former include the production of basic chemicals, vinyl chloride monomer (VCM), polyvinyl chloride (PVC), and resorcinol, and the latter operates pipeline systems, gas plants, cogeneration facilities, and storage facilities. Incorporated in 1986, the company has operations in the United States, the Middle East, and Latin America. This multinational company is Forbes’ number one Most Admired Company in the Mining, Crude Oil Production category of 2018.

OXY launched its bull run in December 2003 with it went above resistance of 20. From that point, the stock generated consecutive higher highs and higher lows until it became toppish at 113.08 in May 2011. It went as low as 63.66 in October 2011, and then it bounced back to resistance of 100 in February 2012. From that point, the stock’s range has been established.

Technical analysis show that OXY may have created a false breakdown when it went below 65 in March 2017. The stock recovered above 65 in November 2017, and went as high as 78.09 in January 2018. Currently, OXY is testing support of 65 and so far it is holding as it is buoyed by above average volume.

The strategy is to buy as close to 65 as possible. If the stock respects this support level, it will climb to our target of 100. The process may take more than six months.

Weekly OXY Chart

Monthly OXY Chart

As of this writing, the Nielsen Holdings PLC stock is trading at 65.99.

Summary of Strategy

Buy: As close to 65 as possible.

Target: 100

Stop: 60

Featured image courtesy of Shutterstock.

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