The Dow Jones Industrial Average with a new all time high close just confirmed Dow Theory, joining the new high in the Transports. This has been 4 months in the making. What to do? Look for turn around stocks. One that I sold out of last month is Sonic (NASDAQ:SONC). This stock has been pulling back since reporting earnings. The close today put the stock price right at the 200 day SMA, where it bounced the last pullback. It also printed a Hammer candle, which is a sign of a possible reversal if confirmed higher. The momentum indicators suggest that it may not be ready though. The RSI is falling, but near the 30 level where it turned up last time. The MACD continues to fall with no sign of a turn.
Sonic is not a buy today on a purely technical basis. But it is worth watching for confirmation of these signals as a spot to enter. A higher close Thursday can be used an entry signal against a stop below Wednesday’s low. Until then it is on the radar.
Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.