Stocks This Week: Sell Short Carmax And Keycorp

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Photocredit: © 2019 Bloomberg Finance LP

© 2019 Bloomberg Finance LP

The S&P is likely to fall in August; here are a pair of short sale recommendations. The monthly S&P 500 cycle peaks at the end of July and falls through August. Cycle signals must be confirmed by market activity as the date of the high or the low approaches. Here is the summary of these factors:

·       Less stocks are participating in the uptrend

·       More stocks are on the new highs list, but the new lows list is also expanding for the first time since October. This has triggered the dispersion indices known as the Hindenburg Omen that have tended to occur at tops.

·       Momentum measures are starting to roll over.

·       The Investor’s Intelligence survey of newsletter writers now reflects excessively bullish sentiment.

·       Hedge funds had been under-exposed to stocks. That situation has reversed dramatically. Holdings are at the highest level since early 2018.

Monthly S&P Cycle

Cycles are pointing to a top.

Cycles Research Investments LLC

The weekly price cycle of Carmax tops on July 20th. Seven of the last nine sell signals have been successful. July has been a weak month for this stock, rising only 39% of the time in the month of July and 50% in August. From the 20th through the 28th, the shares are likely to fall to the $80 area.

Chart 1

This weekly cycle points down for the next week.

Cycles Research Investments LLC

Chart 2

Momentum is waning.

Cycles Research Investments LLC

The weekly price cycle tops later this week on July 26th. Eight of the ten sell signals have been profitable.

The stock has risen less than half of the time in the month of August. The share price is likely to decline to the $16 area by late in the coming month.

Chart 3

This cycle points to lower prices through July.

Cycles Research Investments LLC

Chart 4

Relative strength has been weak.

Cycles Research Investments LLC

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