How To Trade 6 Diversified Dow Stocks That Set New Recent Highs

As of October 23, the Dow Jones Industrial Average has a solid quarter-to-date gain of 8.4%, which lowers the year-to-date decline to just 1% and pulls the average to just 3.8% below its all-time intraday high of 18,351.36 set on May 19. There are six Dow stocks that set new all-time or multiyear highs last week: General Electric, Home Depot, McDonald’s, Microsoft, Travelers and Visa. Among these GE and McDonald’s are two of the six “Dogs of the Dow” of 2015.

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General Electric (GE) +0.00%  closed at $29.51 on Friday last week, up 17% so far in the fourth quarter and up 16.8% year to date setting a multiyear intraday high of $29.83 on Oct. 23. At its flash crash low of $19.37 set on “Black Monday,” Aug. 24 the stock was briefly in bear market territory.

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Courtesy of MetaStock Xenith

GE’s chart above is positive but overbought with the stock above its five-week modified moving average of $27.06 with its 12x3x3 weekly slow stochastic rising to 83.07 last week up from 75.72 on Oct. 16, so the stock is now overbought. The stock had been above its 200-week simple moving average since the first week of 2012 when the average was $18.20. This moving average is now $23.98, last crossed on Black Monday, Aug. 24.

The horizontal lines are the Fibonacci Retracements of the crash of 2008. General Electric is one of the few Dow components that did not set a new all-time high in the rally since March 2009. The Black Friday low of $19.39 held its 38.2% retracement of $19.67. Now the stock is above its 61.8% retracement of $28.26.

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Courtesy of MetaStock Xenith

Home Depot’s (HD) weekly chart above is positive but overbought with the stock above its five-week modified moving average of $119.56 with its 12x3x3 weekly slow stochastic rising to 86.25 last week up from 81.80 on Oct. 16, so the stock is now more overbought. The stock had been above its 200-week simple moving average since the week of Aug. 12, 2011 when the average was $28.79. This moving average is now $80.20.

Strategy Guideline for Home Depot: Holding a quarterly pivot of $123.01 targets a semiannual risky level of $138.63.

McDonald’s (MCDclosed at $112.59 on Friday last week up 14.3% so far in the fourth quarter and up 20.2% year to date and set an all-time intraday high of $112.87 on Oct. 23. The stock survived its flash crash low of $87.50 set on “Black Monday”, Aug. 24.

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Courtesy of MetaStock Xenith

The weekly chart above is positive but overbought with the stock above its 5-week modified moving average of $102.46 and its 200-week simple moving average of $95.84. The 200-week provided the staging ground for the upside breakout since the week of Sept. 12, 2014. The 12x3x3 weekly slow stochastic reading is rose to 85.14 last week up from 78.99 on Oct. 16, now in overbought territory.

Strategy Guideline for McDonald’s: Holding a semiannual pivot of $106.20 targets annual risky levels of $118.26 and $118.62.

Microsoft (MSFT) -0.76% closed at $52.87 on Friday last week up 19.5% so far in the fourth quarter and up 13.8% year to date and set a multiyear intraday high of $54.07 on Oct. 23. The stock survived its flash crash low of $39.72 set on Black Monday, Aug. 24.

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Courtesy of MetaStock Xenith

The weekly chart above is positive with the stock above its five-week modified moving average of $46.99 with its 12x3x3 weekly slow stochastic reading rising to 71.07 last week up from 62.22 on Oct. 16. The 200-week simple moving average of $37.09 was last tested during the week of Jan. 11, 2013 when the average was $27.18.

The horizontal lines are the Fibonacci Retracements from the tech bubble high of $60 a share to the March 2009 low of $14.87. The staging line for last week’s breakout was the 61.8% retracement of $42.77.

Strategy Guideline for Microsoft: Holding quarterly and semiannual pivots of $52.55 and $50.76, respectively, keeps the momentum run alive.

Travelers (TRVhad a close of $112.28 on Friday last week up 12.8% so far in the fourth quarter and up 6.1% year to date and set an all-time intraday high of $112.97 on Oct. 23. The stock survived its flash crash low of $95.21 set on Black Monday, Aug. 24.

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Courtesy of MetaStock Xenith

The weekly chart above is positive with the stock above its 5-week modified moving average of $104.17 with its 12x3x3 weekly slow stochastic reading rising to 58.37 last week up from 47.62 on Oct. 16. The 200-week simple moving average of $85.14 was last tested during the week of Oct. 7, 2011 when the average was $49.14.

Strategy Guideline for Travelers: Holding a quarterly pivot of $109.31 targets a semiannual risky level of $125.19.

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Visa (V) -0.96% closed at $77.07 on Friday last week up 10.6% so far in the fourth quarter and up 17.6% year to date and set an all-time intraday high of $77.63 on Oct. 23. The stock survived its flash crash low of $60.00 set on “Black Monday”, Aug. 24.

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Courtesy of MetaStock Xenith

The weekly chart above is positive with the stock above its 5-week modified moving average of $73.36 with its 12x3x3 weekly slow stochastic reading rising to 77.15 last week up from 69.91 on Oct. 16. The 200-week simple moving average of $49.34.

Strategy Guideline for Visa: Holding a quarterly pivot of $75.13 targets a semiannual risky level of $81.98. An annual pivot lags at $67.25.

Disclosure: I hold no positions in General Electric, Home Depot, McDonald’s, Microsoft, Travelers or Visa.

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