Investing Daily analyst William Romov recently penned a story for TheStreet touting three stocks with healthy dividends as strong buys: Avangrid (AGR) , Eastman Chemical (EMN) and PPL (PPL) . Still, it's always worth a look at charts and indicators when considering potential investments.
In the daily chart of AGR above, we can see a pretty bearish setup for the stock. Prices have been trending lower since early July. The 50-day simple moving average line has had a downward slope since mid-August. AGR is also trading below the slower to react 200-day average line, and that is just now turning lower. The overall level of volume this year has been relatively light, but notice the direction of the on-balance volume line since early July. The OBV line has been declining and signals that sellers of AGR have been more aggressive than buyers. The OBV line declines when the volume of trading is heavier on days when AGR has closed lower. Heavier volume on a down day tells us that investors and traders are more anxious to get out of longs. In the lower panel is our favorite leading indicator -- price momentum -- and we are not seeing a meaningful bullish divergence between price and momentum to suggest a rebound is coming.
In the three-year weekly chart of AGR above, we can see that the stock has had some ups, but the declines have been hard and give the chart a much more bearish character. Here we are trading below the declining 40-week moving average line, and the OBV line has been pointing down since early 2015. The trend-following moving average convergence/divergence oscillator is below the zero line the past month, and that is an outright sell signal. So while AGR may be interesting from a fundamental perspective, the chart is still bearish, and without a base pattern I would not look to be a buyer.
In the daily chart of EMN above, we see a much different chart picture than what we saw in AGR. Here EMN is trading above the rising 50-day and 200-day averages. The OBV line has been rising since February and suggests months of accumulation. The MACD oscillator gave an outright go long signal at the end of October when it crossed above the zero line. EMN has yet to break above the late April-early May zenith.
The three-year weekly chart of EMN above shows both a longer-term downtrend for EMN and a developing turnaround to the upside. Recently, EMN rallied above the now-rising 40-week moving average line, but prices have yet to establish a higher high by breaking above the April peak. The OBV line on a weekly time frame has been neutral. The weekly MACD oscillator signaled a cover shorts buy signal in October and could soon clear the zero line for an outright buy signal. Looking to go long EMN? I would try to buy a dip to around $71 and then risk below $68.
In the daily chart of PPL above, we can see that PPL has been in a downtrend since late June. Recently, PPL has not broken below its recent October low. This could, repeat could, be the start of a turnaround. Prices are still below the declining 50-day simple moving average line. The 200-day average is just now turning lower. The MACD oscillator moved up the zero line and has turned lower again. The OBV line has been in a decline since late June, and it has mirrored the price action. A rising OBV line would be a strong positive clue that buyers of PPL were becoming more aggressive.
In the weekly chart of PPL above, we can see that the $32 area is good chart support, and this may be the best reason to look to be a buyer of PPL. Prices are below the declining 40-week moving average line, but notice the weekly MACD oscillator in the bottom panel. The two lines that make up this indicator have begun to narrow toward a cover shorts buy signal. It is early in this potential turnaround, but aggressive traders may look to probe the long side of PPL and then look to add to positions on strength.