MENTIONS

None of the mentions from last week reached the desired entry points and therefore were not instituted. Nonetheless, the mentions remain viable. By the same token and due to the action seen in the overall market last week, the desired entry points do have to be adjusted downward. The stop losses will not necessarily be lowered at this time, meaning that the risk/reward ratios will change somewhat.

TOL - Friday Closing Price - 99.79

TOL is a stock I shorted in September at the $80 level and covered (with a profit) in October at the $70 level. Since then, the stock has appreciated over $35 in value (up over 30%). The company is a builder in the Real Estate market and as such, is likely to be sensitive to what the stock market does.

Having said that, TOL now shows a successful retest of the all-time high at 105.91 with the high made 2 weeks ago at 104.48, followed by a lower low and a red clse this past week. Nonetheless, the stock gapped down between 102.52 and 102.37 amnd given the strength seen in the stock of late, as well as there being no specific news to support the gap, it does mean that the probabilities do favor the gap being closed. This does mean that desired entry point has shifted from 103.20 down to around 102.50. Unfortunately, the stop loss cannot be moved lower (it remains at 106.35). Everything else remains the same, meaning that the risk/reward ratio has gone from being 7-1 to being 4.8-1.

It is expected that the index market (and probably TOL as well) will rally at the beginning of the week and last week's high in the stock be broken by a small amount. As it is, the stock closed very slightly in the lower half of the week's trading range, suggesting just about equal chances of going above 102.37 or below 97.42 this week. If the stock gets up above 102.25, consideration can be given to shorting it there. It is possible that the gap may not get closed.

As such, a short on TOL above 102.25 and using a stop loss at 106.35 and having an 83.83 objective offers a 4.7-1 risk/reward ratio. My rating on the trade is 2.75 (on a scale of 1-5 with 5 being the highest).

DD Friday Closing Price - 76.69

DD is a DOW stock that has not been able to accomplish anything like the index has accomplished, meaning that it is likely to be one of the first stocks that the bears will climb aboard on when the index falters. The best the stock has been able to accomplish is a 16-week high, which was made last week. Nonetheless, there is established and decent to strong resistance between 78.06 and 78.98 that goes all the way back to February 2022 (22 months) and that is made up of a total 4 different highs made during that period of time.

Since November 2022, DD has traded (and closed) above the 200-week MA (currently at 67.77) every week except 2. Then again, during that same period of time, the line has been visited a total of 5 occasions, meaning that if the stock is to head lower, that line is the prefect and clear objective.

DD did generate a negative reversal week, going above the previous week's high and then closing red and in the lower half of the week's trading range, suggesting further downside below last week's low at 76.32 will be seen this week. The stock did get up to 77.74 and that means it got up to within $.32 cents of the desired entry point. It does suggest that the upside has likely been reached and that the stock will move lower from here. The chart does suggest there is a decent chance of the stock getting up to 77.41 this week and therefore, shorting the stock near that level is the desired way to go. Based on the negative reversal, the stop loss can be lowered from 79.25 to 78.35. The downside objective of 67.77 remains the same, meaning that the risk/reward ratio is around 10-1. The stop loss does need to be mental. The original stop loss at 79.25 can remain and that would make the risk/reward ratio about 5-1.

Shorting DD anywhere close to the $77.30 level and using a stop loss at 79.25 and having a 67.77 objective will offer an 5-1 risk/reward ratio. My probability rating on the trade is 3.50 (on a scale of 1-5 with 5 being the highest).

MMM Friday Closing High - 108.59

MMM is another DOW stock that did not gain or participate in the rally like the index did. The stock did make a new 21-week high the previous week but is still facing an established intraweek resistance level of note at 113.14, which is the 10-month spike high (made in July 2023) and from which the stock went down to make a new 11-year low at 85.35. The very fact that the stock was making a new 11-year low at 85.35, which was a drop of 61.2% from its all-time high, at the same time that the index was making a new 7-month low and only 12.4% from its previous all-time high is a strong sign that there are some innate and fundamentally negative issues with the company itself, which would make the traders choose to short this stock over some of the others in the index. In addition and of importance, the 85.35 low has not yet had a retest of it and having shown so much weakness over the past 3 years, a retest of that low is almost a must situation.

MMM did generate a negative reversal week, having made a new 24-week intraweek high but then closing red. The stock did close very slightly in the lower half of the week's trading range, suggesting almost equal chances of going above last week's high 110.66 as going below last week's low at 106.80. Nonetheless, the stock did close near the high of the week on Friday and the first course of action on Monday is likely to be to the upside and up to the 110.18 level. As such, that will be the new desired entry point into a short position. Having said that, the stock did not give any negative signals last week and it is still possible that the stock will outperform the index and head up to the original desired entry point around the 112.00 level. On a weekly and monthly closing basis, the area between 110.50 and 111.88 should not be broken without either good fundamental news on the company, or the indexes continuing higher.

As such, the probabilities do favor MMM heading back down to test the 85.35 low sometime over the next 4-8 weeks. On a weekly closing basis, there is minor to decent support between 96.94 and 97.29. On a daily closing basis, that support is at 93.96. The 200-day MA is currently at 100.24 and that line will certainly be a magnet if the stock and index market start to falter. Whether the line holds up or not, is not something clear right now but that is a clear target. To the upside, it is evident that the 113.14 level is resistance that should not be broken if the stock is to correct. As such, the stop loss will be at 113.35.

Sales of MMM around the 110.00 level and using a stop loss at 113.35 and having a minimum objective of 100.24, offers an 3-1 risk/reward ratio. If able to short the stock around the 112.00 area, the risk/reward ratio climbs to 8-1. If the stock heads down to the established support mentioned above, the risk/reward ratio could be as high as 13-1. My rating on the trade is 2.75 (on a scale of 1-5 with 5 being the highest). The rating is on the low side due to the fact that this is a big and established company that has taken a big fall in price and could outperform the index. Having said that, the risk/reward ratio is too good to pass up.