3 Stocks I Saw on TV: RAI, QCOM, KO (March 10, 2016)
RAI QCOM KO
Look, every night we watch the same shows, Fast Money and Mad Money, and we want to use those ideas to make some money. Good trading takes more that just hitting the buy button after the opening bell every day. Let’s go beyond the TV screen and check out these 3 stocks I saw on TV. Today we’re going to look at Reynolds American ( NYSE:RAI ), Qualcomm ( NASDAQ:QCOM ), and Coke ( NYSE:KO ).
We’ll start out with Reynolds American ( NYSE:RAI ), it’s just a good old American tobacco company. What could be better than that, right? I’ll tell you what’s better than that, you could call this a little cup and handle I guess. I just call it a continual bounce off of the 50-day moving average. By the way, Philip Morris ( NYSE:PM ) and Altria ( NYSE:MO ) are essentially doing the same thing, new highs all the time. Here’s one thing I don’t think Pete mentioned, the dividend, 3.28 percent. Now it used to be higher, when the stock was lower. But 3.28 percent on a stock that’s essentially bullet proof, about as close as you can be, is a good deal. I like Reynolds American ( NYSE:RAI ). If it would pullback to 50.00 or even maybe a little below 50.00 that would be a great time to buy.
But here’s the thing on this stock, and on the other tobacco stocks too, you’re kind of in this for the long haul. The trend is a really clear trend and so you don’t have to rush in and buy this stock all at once. You can scale in, you can take a very small position in the stock just to kind of get it in your portfolio so you don’t forget about it. You can take a small position and then if the stock ultimately does PULLBACK to the 50-day moving average you can buy more. On the other hand, if the stock just kind of seems to drift sideways for a while, and the 50-day moving average ultimately catches up to it, well then you buy more as well. But the bottom line is you’re managing your risk. You’re managing the risk of missing out on the upside versus the risk of getting caught on a downside move. So you can kind of split the difference here with Reynolds American ( NYSE:RAI ).
Now, Dan Nathan likes Qualcomm ( NASDAQ:QCOM ) to the short side. He thinks that this a stock that you can short down to $45.00. I don’t know, frankly, about the $45.00 level, but lets look at this. The weekly chart, this is absolutely not a stock that you want to be buying here. The way this has been trading, I think it’s a fair guess, and that’s all it is, is a guess, that 42.00 would be the bottom. I mean, lets just draw a couple real straight lines here. Lower highs, lower lows, but the lows are just diverging, they’re getting further and further away from the highs. This can’t keep on unless ultimately the stock does a snap hook and starts going the other way. Obviously it’s not going to do that. So this is a stock that’s looking for a bottom. I like shorting downtrending stocks, this is kind of a rule and it’s a good rule, I didn’t make it up, the market makes it up. I like shorting downtrending stocks when they’re are DONE snapping back. Right here, I could even make a case for here, this is a weekly chart so we’re going really slow motion.
Here, move, another attack to the 200-day moving average, now this looks like it’s moving lower. So I like Dan’s strategy of shorting this stock. I would keep a buy stop if you’re going to do that. I’d keep a buy stop just a little above 56.00. Hopefully you’re not going to get clipped. And by the way, if you want a tighter stop, seriously you could put it right up here. Because after all the 200-day moving average hasn’t really been relevant, it’s just been kind of been drifting down. The stock looks like it’s going straight down to heaven’s basement here, so you could actually keep a tight stop a little bit above 54.00. So you short the stock now, if the stock moves higher from here you know you’re wrong. Well it’s called trading. If you can’t handle that you need to just get on your big boy pants and do something else, because that’s going to happen. But as far as a $45.00 level, it’s like down there, I think you might be asking a little much. If you’re shorting it here at $52.00, I’d look to get out at $48.00, something like that. That should work better.
Now Guy, he’s a Coke ( NYSE:KO ) guy. No not that coke, I’m talking Coca-Cola ( NYSE:KO ). A decent dividend here as well. This stock has been trading sideways seems like forever. But this looks likes it’s kind of a high base, it’s a new high or close to it, just today as I record this video. So I like Coke ( NYSE:KO ), I would prefer get it on some kind of a pullback, even to $43.00, something like that. But ultimately I think this stock moves higher so I like what Guy has to say.
3 Stocks I Saw on TV Free Chart