How To Trade Boeing, Caterpillar, Cisco And JPMorgan

Disclosure: I hold no positions in Boeing, Catepillar, Cisco Systems or JPMorgan Chase.

Shares of Boeing, Caterpillar, Cisco Systems and JPMorgan Chase could not hold their 200-day simple moving averages on Friday , which provides a warning that weakness on the Dow Jones Industrial Average could decline towards its 200-day at 17,119 versus Friday’s close of 17,535. Here’s the daily chart for the Dow 30.

The Dow 30 ended last week at 17,535, up just 0.6% year to date and is 4.4% below its all-time intraday high of 18,351.36 set on May 19, 2015. Thursday will be the one-year anniversary of this high. This year’s high is 18,167.63, set on April 20. The Dow ended the week below its 50-day simple moving average of 17,639 and above its 200-day simple moving average of 17,119.

Here’s the weekly chart for the Dow 30.

The weekly chart for the Dow ended last week with a downgrade to neutral from positive. The average is below its five-week modified moving average of 17,585, but its 12x3x3 weekly slow stochastic remains overbought at 85.31, down from 88.99 on May 6.  The 200-week simple moving average is rising at 16,126, which is a major support.

Last week my proprietary analytics showed that the Dow 30 could trade as high as 17,985 in May and this level was tested at the high on May 10. The fact that the weekly chart has been downgraded makes it difficult for the average to trade up to 18,246 by the end of June. Even with this upside potential, the downside risk is to 14,592 by the end of 2016, below the 2016 year to date low of 15,450.56 set on January 20. Keep in mind that the Dow could fall to its pre-crash of 2008 high of 14,198 set in Oct. 2007.

Here’s the analysis for the four Dow stock that failed to hold their 200-day simple moving averages on Friday.

Boeing closed at $132.12 last week, down 8.6% year to date and up 29.4% from its 2016 low of $102.10 set on Feb. 11. The stock is in correction territory 12.3% below its 52-week high of $150.58 set on Nov. 20. The stock ended the week below its 200-day simple moving average of $134.24.

Boeing's weekly chart is positive but overbought with the stock above its five-week modified moving average of $130.72 and above its 200-week simple moving of $118.94. The 12x3x3 weekly slow stochastic reading rose to 81.12 last week up from 79.58 set on May 6, moving above the overbought threshold of 80.00

Investors looking to buy Boeing should do so on weakness to $105.08, which is my annual value level. Investors looking to reduce positions should sell strength to $136.86, which is my risky level for May.

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Caterpillar closed at $70.07 last week, up 3.1% year to date and up 24.3% from its 2016 low of $56.36 set on Jan. 20. The stock is in bear market territory 21.8% below its 52-week high of $89.62 set on May 21, 2015. The stock is below its 200-day simple moving average of $70.94.

Caterpillar's weekly chart is negative with the stock below its five-week modified moving average of $73.91 and well below its 200-week simple moving of $86.72. The 12x3x3 weekly slow stochastic reading fell to 77.02 last week down from 85.28 on May 6, falling below the overbought threshold of 80.00

Investors looking to buy Caterpillar should do so on weakness to $67.40 and $65.98, which are quarterly and monthly value levels, respectively. Investors looking to reduce positions should sell strength to $79.16 and $81.62, which are risky levels for this week and until the end of 2016, respectively.

Cisco Systems closed at $26.53 last week, down 2.3% year to date and up 18.1% from its 2016 low of $22.46 set on Feb. 11. The stock is in correction territory 11.3% below its 52-week high of $29.90 set on May 19, 2015. The stock is below its 200-day simple moving average of $26.82.

Cisco's weekly chart is negative with the stock bellow its five-week modified moving average of $27.18 and above its 200-week simple moving of $24.27. The 12x3x3 weekly slow stochastic reading fell to 70.90 last week down from 81.74 on May 6 falling below the overbought threshold of 80.00.

Investors looking to buy Cisco should do so on weakness to $17.99, which is my annual value level. Investors looking to reduce positions should sell strength to $28.12, which is my semiannual risky level, which failed to hold several times since the ides of March.

JPMorgan Chase closed at $61.20 last week, down 7.3% year to date and up 16.6% from its 2016 low of $52.50 set on Feb. 11. The stock is in correction territory 13.3% below its 52-week high of $70.61 set on July 23. The stock is below its 200-day simple moving average of $62.33.

JPM's weekly chart is on the cusp of being negative with the stock a penny below its five-week modified moving average of $61.21 and above its 200-week simple moving of $55.99. The 12x3x3 weekly slow stochastic reading slipped to 78.16 last week down from 79.75 on May 6, below the overbought threshold of 80.00

Investors looking to buy this stock should do so on weakness to $60.20 and $55.45, which are monthly and annual value levels, respectively. Investors looking to reduce positions should sell strength to $62.45 and $65.26, which are quarterly and semiannual risky levels, respectively.

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