3 Stocks I Saw on TV: JBL, CMG, XLV (March 17, 2016)

by DAN JBL CMG XLV IBB XLV XLK XLV XLK XLV IBB 
Every day we watch the same shows, CNBC, Fast Money, Mad Money, and we want to use those ideas to make some money. Well good trading takes more than just hitting the buy button every morning on some of the stocks that you saw on TV last night. I’m here to help you make some money on 3 stocks that I saw on TV.

Today I want to start off with Jabil ( NYSE:JBL ). The company reported earnings; they missed them pretty badly as you can see, the stock is down over 10 percent. The deal with this, they got the unhappy triad. They missed their earnings. They missed their revenues. And they guided downward. The only way it gets worse than that is if all share holders got E.coli, or something like that. So the CEO said they’ve got reduced demand for mobility. Well since that’s kind of what they do, that’s a problem. I don’t want you to buy this dip. Now, the stock traded off of 19.00 so it’s up a little bit off of the lows, but just stop and look at this for a minute. The stock did not even come CLOSE to this last high. Of course few stocks have, but it hit the 200-day moving average technically, and couldn’t stay above this level. This huge volume, this is institutional distribution. This isn’t Billy Bob and Jethro deciding to sell their thousand shares of stock. This is a huge volume today, it’s basically all been to the downside. So with 18.50 as potential support, here’s my question: Why would you want to buy a stock that’s under distribution, that’s at least 5 percent above where potential support is, and the stock is coming out of a volatility squeeze to the downside? I just don’t think there’s a deal here for you. Just stay away. Certainly the only momentum this stock has is up, down, and sideways and that makes for a heartburn.

Okay, Chipotle ( NYSE:CMG ). Yesterday I mentioned in our forum at Stock Market Mentor and then I think I also mentioned it in our video, that if the stock fell back down to say 480.00, if it held above that level, it was probably going to be a pretty good trade, and it was. It did hold and it was a trade. Today the stock gapped down a little bit from the close and has just kept going. The deal is, and this is important, again, just like Jabil ( NYSE:JBL ) only more so, this stock is in or has been in a volatility squeeze. The Bollinger Bands were about 7 percent wide. That’s pretty tight. Compressed volatility, now the stock is moving downward. Jefferies cut their price target from 490.00 to 390.00, right? Wrong. They cut it from 390.00 down to 350.00. Their price target had been down here, they dropped it all the way down to here. I don’t know whether the stock is going to fall that far; I like the food at Chipotle ( NYSE:CMG ) but I seem like the only one. The CFO said that they may lose 7 percent of their customers, they may not return. Considering operating expenses are the same, that just basically eats into profit margins. I think this stock is going lower. I’m happy that they serve beer at their restaurants, but if I’m long this stock right now I’m going to feel like getting drunk, it’s just not where you want to be.

Now, XLV ( NYSEARCA:XLV ), They were talking about healthcare and biotech on Fast Money, and essentially saying, as I understood it, XLV ( NYSEARCA:XLV ) is a better place to hide out than IBB. Biotech is a part of the XLV ( NYSEARCA:XLV ), but this has really been taking it on the chin. Whereas healthcare, they’ve got Pfizer and Johnson & Johnson so it’s a better place to be. Now, one of the guys on the desk mentioned that essentially money managers are ditching this stuff because they want to be in the higher growth stuff. I think that’s what you need to do too. If you’re holding on to healthcare it’s probably some kind of asset allocation. Find a different allocation because this isn’t working. Unless you’re managing a couple trillion bucks (then you work for the Fed), unless you’re managing a couple trillion bucks you don’t need to have such a broad diversification in your assets. Sell your stuff here, it’s crap, it’s not working, these are all trending lower. Compare that to the XLK ( NYSEARCA:XLK ). Why do you think this is up, while the XLV ( NYSEARCA:XLV ) is down? It’s because this is under distribution (XLV). This is under accumulation (XLK). You want to be in stuff that is above the 200-day moving average. Frankly, in this market, it’s almost, and I mean almost, that simple. Not quite, but you want to get rid of stuff (XLV) that’s trading down like this. And this (IBB), definitely, no place for you here unless it’s an oversold bounce. So if you’ve got losers just swallow you’re pride, sell them, get ready to move on.

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