The Big 3: MO, VLO, RTX

get your podcasts. Welcome back to trading 360. I'm Marley Kayden. It's time for the big three. We've got three stocks for you and three charts. Rick Duquette will take us through the technicals here to take us through his picks today. Achilles Larry a junior the founder and CEO Larry Wealth Management. Achilles always great to have you on for the big three. You've got a day of green across the big board right now. We got some positive inflation data but a heavy anchor attached to IBM today and oil moving higher. How are you looking at the market right now. Well, if we're looking at the short term and thank you for having me on. Again. A short term we're looking where oil dragging things down. You know the question. Okay. We're at $80 a barrel and we've given up some gains. But are we going back over $100 a barrel? Is this conflict going to drag the economy down further? And then I would also say with IBM is, you know, investors are asking both institutional and retail. They're asking themselves, is this symptomatic of the sector as a whole? How many other companies are going to be affected by this type of guidance on the lower end? So that's another thing we have to keep in mind. Overall, though, we are in the summer, we have to remember that there's a lot of, you know, kind of boring things going on. Not a lot of big conviction in any one direction, but the markets as a whole are moving in a positive direction. And we here at Larry Wealth don't see that changing anytime soon. And we look for the markets to really make a big turnaround towards the end of August, beginning of September. All right. So as we dive into your big three, you brought us a very diverse group today. Your first one, Altria nicotine and tobacco companies. So what's your outlook for Altria? Yeah. You know, this is one where my team will look at me with the eyebrows up going, hey, you know, what are you thinking here? And time and time again when Altria has done is that not reinvented themselves but taken the product that is, you know, for lack of a better word, an addictive product and remarketed it to a different generation, whether it be in the tobacco packs and the like. The stock's dividend is over 5%. Anyone who has owned this stock, the secret has never been in owning the stock. Once the secret has been continuing to purchase again and again and again. Personally, from my point of view, I have done that and done very well doing that. So, you know, this is just one of those things when it comes to the returns we're looking for the next 14 months. We're looking at and between 7 to 12 the stock boring stocks also in any flight to quality institutional and retail investors year over year keep coming back to Altria Group. Forget about the noise outside. But they come back. They invest back into this high quality portfolio stock. You want to own this stock on the long period of time. Because in the sector as a whole, there is growth occurring and we want to be a part of that. All right Rick. So as we look at the chart here on Altria, they've got an earnings event coming up at the end of the month. Their EPS projected to rise a little bit more than 4%. But what are you seeing here in the technical setup. Yeah. You know newer traders can be sometimes surprised that this is considered a consumer staple because people are unwilling to do without it, even when times are bad, particularly here. So I think there's some logic behind what Achilles is saying here. So anyway, when we think about the chart more specifically, we hit some highs 7456 was a repeated peak. So that's kind of the ceiling of our recent activity. Then we also have a corresponding floor. We had highs around here near 68. That then became the floor. So old resistance became new support. So now we have a range generally speaking about 68 to about 74, 75 or so. More recently, we have brushed up against our recent relative lows near about 70, 76, 70, 77. We're basically right on the nose there of making new lows beyond that point. So this could be a potential support or breakdown point, depending on your view. That's what we try to do with this type of analysis here is to find these inflection points where you could see some kind of breakout activity nevertheless trending upward here going across these lows, with also a corresponding boundary line going across the highs to give us more of a triangular type of shape. Here, when we think about our moving averages that we follow here, our faster five day EMA in dark blue crossing below its slower counterpart, the teal 21 day EMA. So the weekly crossing below the monthly. They're both on top of each other near about a 71, 60, 71 or 75 or so. So a sign of of a possible trend shift here is when the moving averages start to cross below their their slower peers. 63 day EMA in gold here, 7043 could be a supportive area pretty close by as well to the downside. RSI showing some modest declines here but also very modest increases. So a matching kind of triangular shape with our price activity. Here we are a bit below that 50 midline though which does suggest more of a bearish tilt. Finally we can see our volume profile study shows trading activity is heaviest near current prices between about 71 to 74 roughly. Then things dissipate somewhat here and pick up again down here between about 64 to 67. Our point of control, the heaviest trading area of all our thick red line comes in right around 66. And very interesting. You point out, Rick, that this is a consumer staple. Tobacco products nicotine products looked at a staple. And cell phones are still a discretionary item. So Alex coffee's always making an argument to reclassify cell phones into a staple item. But they are still discretionary. This next pick here, Achilles is one we've been talking about quite a bit. A lot of people share a similar outlook to you on Valero Energy. How much of Valero being in your big three is tied to everything that we have going on in Iran right now? Oh, we love news going back and forth. Is it really is it really not happening? You know, companies like this are going to benefit either way. So we're looking at just look at the last year, year to date numbers that have come in. And we've based our recommendation really more on going forward. If this was a prolonged then what if this is short, then what? So we come back to Valero. As in the sector being of high quality, but more importantly, still performing on a high quality level. We see a double digit return for this. Wouldn't be surprised if we see anywhere between 15 to 16% in an 18 month time period. We think that's on the conservative side, just from what we've seen lately. Also, we think the sector as a whole is benefiting. But Valero for one reason or another, they just seem to have more efficiencies in terms of efficiencies of scale. We believe that the stock has done well because the company is run really well. Management strategy has done an excellent job moving forward. But what we would look at long term when it comes to a stock like this, because we were big BP investors for the longest period of time, and we just saw that sector as a whole was growing and there was more opportunities. We're not afraid to go into another oil company. And and we believe that they're well positioned to do going forward, make more investors, make more money for our investors. Yeah. And every time I talk about Valero, everybody brings up their margins and their favorable margin numbers. But Rick, as we as we look at Valero here and the technical setup, you can see we we had this nice move to the upside. But since we've had a much steeper move to the upside in this name. Yes, exactly. So what we had was a more gradual climb here. We could have drawn this boundary line going across the lows. Not quite a parallel line going across the highs. They are converging toward each other. But it has transitioned into this very steep, very sharp upward trend line here with coupled a shape like more like a rising wedge here. Typically this is regarded as a bit more of a shorter term bearish type of setup. Here we did hit new highs though 300.1. We are backing off a little bit from that point though. But really what you'd be looking for with any kind of pattern like this would be a break beyond these increasingly more established trend lines or boundary lines here that would open the door to potential breakout activity. That triggers the cascade of orders that results in kind of runaway price activity. So low point here near about 278 or so, high points here near about 271 and then a range 264 to about 233. So those are some areas that stand out in terms of horizontal price levels. RSI actually is showing some interesting activity here. We are still following our green upward sloping trend line. We are pushing above the 70 level now that represents the overbought area, a strong close above the overbought area during a trending market is often viewed as a sign of further strength to come. Kind of counterintuitive to the name here. We can also see, though, that our five day EMA and dark blue lines up pretty closely with our trend line. So if we were to break below that, the 21 day EMA and teal representing one month comes in at about $2.67 roughly or so. That could be the next area to watch for further support. Finally, our volume profile in this case shows that we have the most significant trading activity node that's closest to our current price levels here. 235 to about 248 that's where things are heaviest here, especially centered around maybe 242 or so. So that's an area to watch to the downside for potential solidification if we do start to go south. All right. Valero also has the same earnings date as Altria. They're both reporting on July 30th. Right at the end of the month. We're a little bit more than two weeks away from that. This last one. Very different chart for us to look at here. We're talking about RTX Raytheon. A lot of discussion about defense names. Of course, with all of the geopolitical headlines going on right now. But RTX only up about 7% year to date. So Achilles, how are you looking at Raytheon? It's one of these a lot to do about nothing it seems. You know 7% doesn't seem like a heck of a lot. Dividend yield is minuscule. But then all of a sudden you'll see the stock move up 10% in less than a month. You know, it's one of these stocks that earnings come out. They're kind of like ho hum. Not a heck of a lot happening there. But the the interest institutionally and retail has been always big in terms of this stock. You know, back in the days of United Technologies, what really drove this company and still driving the company is the amount of businesses it is involved in. On the diversity of income and revenue that comes in. So we're looking at that. We're looking at possibly another 6 to 14% in 18 months. We think that's actually conservative. We have been over the years. I mean, we've been investors in Raytheon over 20 years, and we have been rewarded again and again with short bursts of strength on the upside. And we continue to see that trend going forward, albeit, like I said, this is a bit of a slow year. It's a bit of a ho hum year, but we still believe that the stock should be part you know, all the stocks that are recommending today are, hey, if there's a flight to quality, I want to be in these stocks. There's no tech heavy in these stocks at this particular point. And I want to have that quality in my portfolio. All right. So as we look at Raytheon here, you know very different chart than the last couple names that we looked at. But as Achilles pointed out, if you look at a longer term chart, I mean, yes, the year to date gains are not great, but the five year gains are north of 130%. So, you know, momentum moving in one direction with this name. But we have a very different setup here. So take us through the technicals. Yes. And the shorter term picture I think is maybe a bit more intriguing than it might seem at first. For starters, we had a trend line going downward off our highs two 1450 that's been broken. So after we formed a base here near 172, we have transitioned into this upward channel type shape. We topped out at those old highs near 204 marked by our red line. We were treated back down and filled the gap. Now we find ourselves in a situation where the next step for the bulls would be to break above those highs near 204 to test two 1450. Those highs that we we hit earlier in this year in a mid February, early March or so. So then if we were to think about our moving averages, we remain above our dark blue five day EMA here. That comes in near 196, 67 or so. If we were to break below the channel 21 day, EMA in teal comes in near 191 50 RSI still trending upward here, a bit shy of that overbought area. A break above the relative highs and a concurrent break into the overbought area is what the bulls would perhaps want to see, so be on the lookout if that starts to happen. Our volume profile finally shows that we do start to thin out in terms of our trading activity above 202, as well as once we start getting below 195. So a bit of a gulf there until we hit 185 to 190. So those would be the areas to watch from a trading perspective. All right. And Raytheon is at 19775 right now trading up 7/10 of a percent higher earnings for RTX coming up next Thursday. So we'll hear from them a little bit sooner. But Achilles great to have you on. Really appreciate you joining us for big three today.