Combing through the Deutsche Bank's list of 12 high-yield long ideas , I cut the list in half, favoring just six names with the strongest and most promising chart pictures and indicators: Cisco Systems(CSCO) - Get Report , Pfizer(PFE) - Get Report , Trinseo(TSE) - Get Report , Cyrus One(CONE) - Get Report , Johnson & Johnson(JNJ) - Get Report and Eli Lilly(LLY) - Get Report .
Let's take a closer technical look.
In this daily chart of Cisco Systems(CSCO) - Get Report we can see that prices are above the 50-day simple moving average line and above the rising 200-day moving average. Prices made a low in January/February and rallied into the $29-to-$30 area, a zone that has capped advances in the past 12 months.
The on-balance-volume, or OBV, line reversed its downtrend in February and has been showing strength during the past four to five months. A rising OBV line tells us that buyers have been more aggressive, with the volume of trading heavier on days when Cisco has closed higher on the day.
The 12-day momentum study in the lower panel is not diverging from the price action, so higher prices are anticipated.
This three-year weekly chart of Cisco is positive and makes us more optimistic about the daily chart. Prices are above the rising 40-week moving average line. The OBV line on a weekly timeframe is improving, and the moving average convergence/divergence oscillator is above the zero line, which tells us we should be trading Cisco from the long side.
Cisco is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio.
Cisco announced its plans to acquire CloudLock, a global leader in the Cloud Access Security Broker (CASB) platform market, for $293 million (plus any equity awards and retention bonuses for employees who join Cisco). The acquisition aims to bolster Cisco's Security and Services offerings and is expected to close at the beginning of next year. Overall, while we recognize the transaction is inconsequential from a sales perspective at this point, it is further indication of Cisco's commitment to higher-margin and higher-growth businesses that will help expand the trading multiple over time. Importantly, the move reinforces Cisco's increased focus on a software-centric, subscription-based model that allows for a more compelling, differentiated business mix and highly visible revenue streams.
In this daily chart of Pfizer(PFE) - Get Report , we can see a February/March turnaround. Prices are above the rising 50-day and 200-day moving averages. The OBV line turned up convincingly in April, and while momentum has slowed from April to June, the rally is still going strong.
This weekly chart of Pfizer shows a broad trading range the past three years. Rallies have been unable, so far, in breaking out over $36, while declines to around $28 have been worthwhile buying opportunities. Recently the 40-week moving average line has turned positive. The weekly OBV line has been rising since February, and the MACD oscillator is in a very bullish configuration.
The time looks right for Pfizer to make a weekly close above $36.
In this daily chart of Trinseo (TSE) - Get Report , we can see that TSE has corrected down below the 50-day moving average line but remains above the rising 200-day average. The daily OBV line has been a little choppy, and momentum has been slowing in March, April and May.
This weekly chart of TSE is strong and makes up for the weakness seen on the daily chart. TSE is above the rising 40-week moving average line. The weekly OBV line turned up in January. The MACD oscillator is crossing to a liquidate-longs sell signal but is well above the zero line.
While TSE shows some short-term weakness, it has been strong the past two years, and without a major top pattern, I favor the long side.
One glance at this daily chart of Cyrus One(CONE) - Get Report and it is easy to see why I like it: It has a strong uptrend pattern. Prices are above the rising 50-day and 200-day averages, with a rising OBV line. While other securities have been weak in recent days, CONE has continued strong.
If you liked the rally on the daily chart of CONE, the weekly chart is even more impressive. Prices are firmly above the rising 40-week moving average line. The weekly OBV line has been rising the past three years, suggesting very strong accumulation. The MACD oscillator shows no signs of weakness as it continues its ascent above the zero line.
Johnson & Johnson
Johnson & Johnson (JNJ) - Get Report has marched to a different drummer the past 12 months, making its low in August/September and climbing since with only one dip in January. Prices are above the rising 50-day and 200-day moving averages. The OBV line has been moving sideways the past year on a daily timeframe, but the weekly chart is stronger.
This three-year weekly chart of JNJ shows this member of the Dow Jones Industrial Average firmly above its rising 40-week moving average line. The OBV line on this timeframe has been rising since September and indicates more aggressive buying when JNJ closes higher for the week. The MACD oscillator is very bullish and has been positive for several months.
Unlike the previous five daily charts, this chart of Eli Lilly (LLY) - Get Report is more of a turnaround situation. LLY made a low in March and has recently turned up above the 50-day and 200-day moving averages. The OBV line indicates liquidation for much of the past 12 months, but a recent uptick may have broken the trend.
This three-year weekly chart of LLY shows why I like the long side of this stock. Prices just rallied above the declining 40-week moving average. While the OBV line is neutral on this timeframe, the MACD oscillator generated a cover-shorts buy signal and is moving up toward the zero line for an outright go-long signal. I would remain positive on LLY as long as it doesn't decline to $70 again.