Chart of the Day: Enough of a Pullback for Us to Start a Position
The stock has taken a major hit with other AI-related names, but a 30% drop in this growth name is probably too steep.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
After a major setback in the early part of summer (not due to anything the company said) we saw an opportunity with Eaton ETN. Today, we brought the name up from Bullpen as we had been waiting for the stock to pullback. Fortunately, a nearly 20% drop from the May highs gave us the chance to add ETN at nice discount. There is nothing wrong with buying a growth name that falls a bit, in fact it is an ideal time to pull the trigger.
Notice the stock was pulled to the 200-day moving average, which acts like a magnet. Testing that level this week was successful; we are seeing ETN flirting with this important moving average, trying to gain some momentum. This effort can be seen in the stochastics (pane 4), as this indicator is starting to turn up. Stochastics are often an early warning signal before the next move occurs.
Money flow and Moving Average Convergence Divergence (MACD) are bearish, though. It is often the case that the indicators are mixed, so we are watching for when more of these are in alignment. Volume trends are turning positive, however, and that may be a clue as to when big institutions are getting involved — which is now.
We have started Eaton with a Two rating in TheStreet Pro portfolio.
At the time of publictaion, TheStreet Pro Portfolio was long ETN.
