NEW YORK (TheStreet) -- As investors consider investment strategies for 2014, I favor allocations to buy-rated stocks in the Dow Industrial Average. In my judgment buy-rated Dow stocks should be considered a part of a portfolio rebalancing strategy where investors take huge profits on stocks on positions set a year ago or back to the lows of March 2009. My concept of rebalancing locks in gains and reduces total dollars invested back to the dollars in the market at the end of 2012.
On Dec. 6 I wrote, Cisco and Intel Are Buy-Rated Dow Stocks to Own and there were 14 buy rated Dow components. Today there are 13 but there are five name changes. General Electric (GE), IBM (IBM) and Intel (INTC) are no longer buy-rated and Johnson & Johnson (JNJ) and Microsoft (MSFT) have recently been upgraded to buy from hold.
Here are my buy-and-trade profiles for the 12 buy-rated Dow stocks:
Cisco Systems (CSCO)($22.31 vs. $20.91 on Dec. 5 up 6.7%) traded as low as $20.22 on Dec. 13 and moved above its 50-day simple moving average at $21.84 on Dec. 27 and is below its 200-day SMA at $23.08. The stock is 12.3% overvalued with a gain of 10% over the last 12 months with a 12 month trailing earnings-per-share ratio at 11.9. Cisco has a positive weekly chart profile with its five-week modified moving average at $21.87 after testing its 200-week SMA at $20.23 at the Dec. 13 low. My weekly value level is $19.35 with a semiannual pivot at $21.96 and annual risky levels at $23.38 and $26.76. Quarter and monthly risky levels are between the annual levels at $24.27 and $25.62.
General Electric ($27.29 vs. $26.45 on Dec. 5 up 3.2%) has recently been downgraded to hold from buy so buy-and-trade investors should shift allocations in General Electric into another buy-rated Dow stock.
Home Depot (HD)($81.50 vs. $78.54 on Dec 5 up 3.8%) traded to a new all-time intra-day high at $82.57 on Jan. 2 with the stock above its 50-day and 200-day SMAs at $79.10 and $76.70. The stock is 10.7% overvalued with a gain of 29.7% over the last 12 months with an elevated 12 month trailing P/E ratio at 21.9. Home Depot has a positive but overbought weekly chart profile with its five-week MMA at $80.18 in a parabolic formation. My semiannual value level is $75.25 with a semiannual pivot at $81.82 and monthly risky level at $84.15.
IBM ($189.71 vs $176.08 on Dec. 5 up 7.7%) has recently been downgraded to hold from buy so buy-and-trade investors should shift allocations in IBM into another buy-rated Dow stock.