The stock traded as high as $92.45 this morning, up 3% to an all-time intraday high.
My call is to book profits on strength to its first-quarter risky level at $95.83.
The Abbott Park, Ill., company makes medical devices and reports increasing demand for diabetes-monitoring meters.
The company has a history of matching earnings estimates and it now has done so for three of the past five quarters. Here’s the analysis prepared by TheStreet.com.
At the intraday high of $92.45, the shares are up 6.4% year to date and in bull-market territory 41% above their Dec. 24, 2018, low of $65.44.
The stock is not cheap: Its p/e multiple is 28.7 with a dividend yield of 1.62%, according to Macrotrends.
The daily chart for Abbott Labs
Courtesy of Refinitiv XENITH
Abbott Labs has been above a golden cross for more than 52 weeks. This occurred when the 50-day simple moving average rose above its 200-day simple moving average and thus indicated that higher prices would follow. This buy signal was in play for this morning’s earnings report.
My investment strategy when a golden cross occurs is to buy weakness to the 200-day simple moving average. This was doable on Oct. 3, 2019, when the average was $79.01.
The close of $86.86 on Dec. 31 was an important input to my proprietary analytics. The annual and semiannual value levels are the horizontal lines at $84.46 and $82.77. Note the buying opportunity at $84.46 on Jan. 14.
The monthly pivot for January at $89.13 was crossed on Jan. 21 as a positive sign for the earnings report. Abbott's first-quarter risky level is above this chart at $95.83.
The weekly chart for Abbott Labs
Courtesy of Refinitiv XENITH
The weekly chart for Abbott Labs is positive, with the stock above its five-week modified moving average of $87.29.
The stock is well above its 200-week simple moving average, or reversion to the mean, at $60.26. The stock has been above this moving average since the week of Feb. 3, 2017, when it was $41.34.
The 12x3x3 weekly slow stochastic reading is projected to end this week rising to 77.56 from 75.1 on Jan. 17.
Note that between the week of July 26 and the week of Oct. 11 the stock had a correction decline of 11.5%.
Trading Strategy: Buy weakness to the annual and semiannual value levels at $84.46 and $82.77, respectively, and reduce holdings on strength to the quarterly risky level at $95.83.
How to use my value levels and risky levels:
The closes on Dec. 31, 2019, were inputs to my proprietary analytics and resulted in new monthly, quarterly, semiannual and annual levels. Each uses the past nine closes in these time horizons.
New weekly levels are calculated after the end of each week. New monthly levels occur after the close of each month. New quarterly levels occur at the end of each quarter. Semiannual levels are updated at midyear. Annual levels are in play all year long.
My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in.
To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.