To help protect gains for existing recommendations, we are tightening our stop-loss levels for two existing short ideas:
Euronet Worldwide (EEFT) to $112 (20-day MA) from $118
KBH Home (KBH) to $37.30 (20-day MA) from $38.20
We also recommend tightening the stop-loss level for one existing long idea:
Simply Good Foods (SMPL) to $36.50 from $35.20
Today, we highlight a new short opportunity in a mid-cap chemicals name, Stepan Co. (SCL):
SCL is showing a loss of intermediate-term momentum within its trading range. Note a weekly MACD “sell” signal developed on the chart below after a failed test long-term resistance in the $112-$113 area. This supports a deeper correction, noting also the weekly stochastics have room to oversold levels.
SCL has negative short-term catalysts, as well, given last week’s breakdown below the daily cloud model (not shown) on negative short-term momentum. In addition, SCL has a breakdown relative to the S&P 500 Index (SPX), supporting continued underperformance in the coming weeks.
The daily cloud model is now initial resistance for SCL, and can be used as a stop-loss level, near $110. Support from the October low, near $92, can be used as targeted support level for a short position.
Stepan Co. (SCL, $103.54):
Target: $92
Stop-Loss: $110