FocalEquity Stock and ETF Model

By -

The stock model is updated to reflect today’s market move. You can download the entire Excel output file at FocalEquity.com. 

For 08/26/2011 trading day,  we are going to focus a long position in EBAY (EBAY Inc.) and a short position MRK (Merck) (charts provided by contributor Roller Coaster).

Ebay (EBAY) is sound in its valuation metrics (quintile ranking: 2 (1-best, 5-worst)) and its contrarain indicator in the model is very high indicating a highly probable relief rally at the very least. The RSI and MACD histogram are showing some divergence when the stock tested the support level; EBAY can possibly now bounce for a short-term trade.

EBAY long 

MRK (Merck)’s valuation is too expensive relative to its earnings growth according to the model (Quintile ranking 5 (1-best, 5-worst)). It showed a lot of weakness when it declined rapidly to the August low.  It may pull back now because it’s near minor resistance from the recent peak.

MRK short 

ETF Model Update:

You can download the entire ETF model Excel output file at FocalEquity.com.

Because of the huge rallies we have had from Monday to Wednesday, many bull ETFs reversed course in sentiment and right now the model is mixing bull and bear ETFs in the new buy and hold categories. We can see there is bearishness in the energy sector as well as the overall market indices such as SPX, DOW and Russell based indices still remain weak. Gold and silver also remain uncertain. Today, we are highlighting ERY (Direxion Energy Bear 3x) and FXP (Proshares Ultrashort FTSE/Xinhua China).

ERY has made a long base, and recently broke out of the trading range.  This pullback can lead to higher highs.

ERY etf 

FXP recently made a bullish move.  It’s now seems to be consolidating, which can lead to new highs.

FXP etf 

ETF Model Image Capture (for trading day 2011-08-26)

DailyModelScoreFile_20110826