#$pg

Procter & Gamble, $PG, comes into the week at short term resistance. Since the start of the year it has made a series of higher highs and higher lows and is now solidly over the 100 day SMA, something it has not done for more than 1 day since the end of May last year. The Bollinger Bands® are open higher. The RSI is rising in the bullish zone with the MACD positive and moving higher. There is resistance at 152 and 153.75 then 155.50 and 157 before 158.75 and 160.25. Support lower is at 150.25 and 147.25. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.79% and started trading ex-dividend on January 23rd.

The company is expected to report earnings next on April 22nd. The February options chain has biggest open interest at the 146 put strike and at the 145 call then the 150 strike. The March chain has big open interest from 150 to 130 on the put side and from 145 to 180 on the call side. In the April chain open interest is large from 145 to 130 on the put side and much bigger at 160 on the call side. Finally, the June chain has very large open interest at the 135 put and 165 call strikes.

Trade Idea 1: Buy the stock on a move over 152 with a stop at 146.

Trade Idea 2: Buy the stock on a move over 152 and add a March 150/140 Put Spread ($2.17) while selling the June 165 Calls ($2.06).

Trade Idea 3: Buy the March/June 160 Call Calendar ($2.78) while selling the April 140 Puts ($1.30).

Trade Idea 4: Buy the April 140/155/160 Call Spread Risk Reversal (85 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the January FOMC meeting in the books and a formal announcement of Kevin Warsh as the new Fed Chair nominee, saw equity markets show strength holding near and setting new highs.

Elsewhere, look for Gold to pause in the uptrend after tagging $5600/oz and pulling back while Crude Oil moves higher in the consolidation range. The US Dollar Index is finding its footing after a 4 year low while US Treasuries continue to hold in the lower end of the consolidation zone and looking better lower. The Shanghai Composite looks ready to continue the uptrend at 10½ year highs while Emerging Markets reset momentum gauges after making new all-time highs in their uptrend.

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers:

CME Group, Ticker: $CME

CME Group, $CME, comes into the week at resistance. It has a RSI on the cusp of the bullish zone with the MACD positive and crossing up. Look for a break over resistance to participate…..

eBay, Ticker: $EBAY

eBay, $EBAY, comes into the week rounding up off a low. It has a RSI rising in the bearish zone with the MACD curling to cross up. Look for continuation to participate…..

General Electric, Ticker: $GE

General Electric, $GE, comes into the week consolidating in a narrow range. It has a RSI in the bullish range with the MACD positive and level. Look for a range break to participate…..

Procter & Gamble, Ticker: $PG

Procter & Gamble, $PG, comes into the week at resistance. It has a RSI rising to the bullish zone with the MACD negative but rising. Look for a push over resistance to participate…..

Shopify, Ticker: $SHOP

Shopify, $SHOP, comes into the week at resistance. It has a RSI rising at the midline with the MACD crossing up. Look for a push over resistance to participate…..

If you like what you see sign up for more ideas and deeper analysis using this Get Premium link.  

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the March Quad Witching in the books, saw equity markets showed mixed results in a volatile week.

Elsewhere look for Gold to continue its uptrend while Crude Oil moves lower. The US Dollar Index continues to trend lower while US Treasuries hold in broad consolidation. The Shanghai Composite looks to consolidate while Emerging Markets move to the downside.

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers:

Abbott Laboratories, Ticker: $ABT

Abbott Laboratories, $ABT, comes into the week approaching the prior high. The RSI is rising in the bullish zone with the MACD crossing up. Look for a push over the prior high to participate….

Albemarle, Ticker: $ALB

Albemarle, $ALB, comes into the week pulling back from a recent top and at support. The RSI is falling through the midline with the MACD dropping but positive. Look for the reaction to touching support to participate…..

Fiserv, Ticker: $FISV

Fiserv, $FISV, comes into the week near resistance in a bounce. The RSI is rising at the midline with the MACD crossed up. Look for continuation to participate….

Norfolk Southern, Ticker: $NSC

Norfolk Southern, $NSC, comes into the week at a resistance channel. It has a RSI rising into the bullish zone with the MACD crossing up. Look for a push through the channel to participate…..

Procter & Gamble, Ticker: $PG

Procter & Gamble, $PG, comes into the week at an all-time high. The RSI is rising in the bullish zone with the MACD about to cross up. Look for continuation to participate…..

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with only 4 weeks of trading left in 2021, saw equity markets showing more weakness.

Elsewhere look for Gold to consolidate while Crude Oil pulls back. The US Dollar Index continues to trend to the upside while US Treasuries renew their uptrend. The Shanghai Composite looks to consolidate in a broad range while Emerging Markets continue to move lower. The Volatility Index looks to remain elevated making building strong headwinds for equity markets.

The stock of Procter and Gamble is presently testing its multi-decade trendline support.

Despite the post-January stock market correction, it has been constructive to see that outside of utilities and real estate, scarcely any other sectors have broken longer-term bull market support of any significance. We noted this in a post a few weeks ago that the consumer staples sector, as represented by the Consumer Staples SPDR ETF (XLP), was testing its Up trendline stemming from its 2009 lows. After holding the trendline again, temporarily, the support has since fallen by the wayside with XLP breaking down. While definitely concerning, one key stock in the sector may have a chance to help stave off any further material weakness, at least in the near-term.

As our Chart Of The Day points out, the stock of Procter and Gamble (PG) is testing a major Up trendline stemming all the way back to its lows in 2000. This is a potentially important opportunity for the consumer staples sector in general as PG constitutes the largest weight in the XLP, at 11%.

As mentioned, if PG can hold this trendline, it may help the sector stem the tide of recent selling. That said, obviously the damage has been done on a sector basis with the XLP breaking down. Therefore, the relief may only be temporary. But it may at least be a decent trading opportunity -- or a decent opportunity to ditch one's exposure to the sector.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!

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A popular Consumer Staples fund is testing its bull market uptrend.

There have naturally been a lot of big winners among the various sectors during this bull market in stocks. And the gains have accrued in a variety of ways. Some of the biggest gains have been in high-profile, “flashy” sectors — but they’ve also required a lot of Maalox along the way. Other sectors have seen more moderate but steady gains. The consumer staples sector would certainly fall under the latter category.

As measured by the popular Consumer Staples SPDR ETF, ticker, XLP, the sector has tripled since the 2009 low, even before factoring in a solid dividend yield. Perhaps the best characteristic of the bull market in consumer staples, though, has been its steady, low-volatility path. At just about -12%, XLP has experienced the smallest post-2009 maximum drawdown of any of the sectors. This has provided for a relatively smooth ride for consumer staples investors.

Sure, there have been a few hiccups along the way. However, over the past half dozen years, each time the XLP experienced a bit of adversity, it was saved by a rising trendline stemming from its late 2011 lows. The ETF is experiencing one of those hiccups now — and testing the trendline once again near the 53.50 level.

With the stock market rally hitting on just about all cylinders at the moment, consumer staples is one of the few areas that has not participated. Based on our approach of investing in the relative strength in the market, that would necessarily disqualify XLP. However, taking another view, it is also one of the few places in the market that is not substantially extended currently. If the trendline can hold again (potential Fibonacci support also lies just below ~52.78), this may be one of the few favorable risk/reward opportunities in the immediate-term.

If you’re interested in the “all-access” version of our charts and research, we invite you to check out our new site, The Lyons Share. TLS is currently running a 30th anniversary 1987 Crash Commemoration SALE, offering a discount of 22.6% -- the equivalent of the Dow's 1-day drop on October 19, 1987. The SALE ends October 22 so considering the discounted cost and a potentially treacherous market climate forthcoming, there has never been a better time to reap the benefits of our risk-managed approach. Thanks for reading!

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The activist fund's Josh Frank discusses why he believes the packaged goods company's innovation engine is broken.

By Ron Orol

Procter & Gamble (PG) CEO David Taylor recently suggested that a proposal submitted by activist investor Nelson Peltz was "very dangerous," -- it would eliminate the company's corporate Research & Development.

"He's proposed something that is very dangerous for the long-term future of the company, that is eliminating our corporate R&D," Taylor told TheStreet founder Jim Cramer on CNBC TV.

Taylor is locked in a heated battle with Peltz, who is seeking to obtain a director position for himself at the company's annual meeting Oct. 10 in what has emerged as the biggest U.S. boardroom battle in recent history. At the center of the dispute is the activist investor's assertion that P&G suffers from "suffocating bureaucracy" and should be restructured into three global business units rather than the four it has now. One core area of disagreement: The company's R&D budget and focus.

In an interview with The Deal, Trian Fund Management Partner Josh Frank, a senior analyst and co-author of a 93-page white paper on P&G, refuted assertions that Peltz wants to eliminate or even stratify corporate R&D. Rather, Frank said that the three global business units, GBUs, Peltz is contemplating would have their own R&D divisions, each with its own leader in control of the business. In addition, he argued that Trian's proposal does nothing to inhibit capital flow to R&D or collaboration among units.

"They can continue to cooperate on certain projects and they can continue to have a central research unit above the GBUs," Frank said.

Even so, P&G contends that Trian would upset the collaborative nature of its R&D operations, which have been a driver of innovation. Taylor has argued that the company's successful sachets business, which include water-purifying packets sold in emerging countries, was developed following collaboration between P&G's liquids and paper teams. Collaboration among R&D teams has also created technology used in many other areas including single dose laundry (Tide Pods) and dishwasher detergent (Cascade ActionPacs).

Nevertheless, the Peltz team argue that there is has been a significant lack of innovation at the company in recent years, one that should be investigated by the board or a subcommittee of directors. "They have not created a meaningful new brand since Swiffer, almost 20 years ago," Frank said. "And R&D behind existing brands has been incremental, not game-changing. The management and board needs to get to the bottom of why the innovation engine is broken."

Frank also urged P&G to focus more on acquiring small brands or developing new brands in-house, adding that millennials don't want the big global brands. He pointed to S.C. Johnson's recent move to acquire soap and cleaning product maker Method as an example of the kind of small but innovative brand acquisitions P&G ought to be making.

"They need to develop small new brands organically through R&D, incubation as well as acquiring small and midsize brands," Frank said.

Battling back Taylor told a Barclays' Global Consumer Staples conference earlier this month that company officials in various units are empowered to consider buying smaller brands if they can show that bolt-on acquisitions create value.

P&G hasn't made many acquisitions in recent years and instead has focused on streamlining its product portfolio. The company has deliberately existed brands driven by fashion, flavor and fragrance. Nevertheless, its various business units have created new brands, such Always Discreet, Febreze car air products, and Unstoppable Scent Beads, in addition to single unit dose laundry detergent.

Even so, Trian contends that P&G has an overly insular culture. Frank insists that P&G doesn't have anyone in its senior executive ranks in an operating role who has any substantial experience outside of the packaged goods company. The observation suggests that the business is overly insular and doesn't adapt well to outsiders.

"Among all senior leadership listed on the company's website, there is no one in an operating role who has substantial experience outside of P&G," Frank said. "The average tenure for a top executive is 30 years."

Taylor, for his part, noted that its chief information officer came from outside, and that it has made four times as many external hires in the past year as three years ago. "Our standard is not internal or external, it's the best," he said.

In addition, Frank points to a series of acquisitions, including Gillette, Wella and Federic Fekkai that have not gone well. "A lot of the talent they did bring on left because P&G was such a difficult place for them to prosper."

Frank also contends -- citing interviews with ex-P&G employees -- that major acquisitions also have done poorly because the company wasn't focused on competition. Gillette, for example, has had difficulty competing with Harry's and Dollar Shave Club.

"We've talked to former Gillette employees. They made very clear that Gillette executives, pre-P&G, would have sat together in a room and not left until they had a plan to compete," he said. "Before it was bought by P&G, Gillette would continue to come up with breakthrough innovative platforms that gave consumers reasons to stay loyal to the brand. But they haven't come up with new a new platform in almost 13 years."

Two weeks ago, the TD Ameritrade Ad challenge took a unique approach to the Super Bowl, focusing on determining the public companies that got the most positive impact out of the commercials shown during the game. At $5 million per 30 second spot, investors want to know which companies are best utilizing their marketing dollars.

To to this, the firm used LikeFolio’s social data technology to track "definitely positive mentions" on Twitter of the brands and products advertised in the Super Bowl.  Scores for each brand and product were added together to determine an overall score for each publicly traded company, resulting in a clear list of companies that got the most out of their advertising dollar.

Winners

 $KO — Coca Cola went wire to wire with its America the Beautiful ad.  Incredibly positive response and to top it off the company did it on a budget by recycling the ad and airing it prior to kickoff.

 $VLKAY — Audi (owned by Volkswagen) put out the most controversial ad of the game by focusing on equality of pay for women.  The controversy worked, creating a firestorm of conversation that lasted for days.

 $PG — Mr Clean cleaned up and Tide did well for Proctor and Gamble, which turned boring household supplies into funny and very well received ads.

 $GM, $BUD, $TMUS, $HMC and $PEP rounded out the top 8 in the big reveal… beating out over 40 public companies that shelled out $5 million for 30 seconds of consumer attention.

These winning stocks can now be tracked through the LikeFolio Big Game Winners watch list in the Yahoo Finance app!

  Follow through

Winning the biggest game in advertising is one thing, but it’s not going to move the needle for these major brands unless the positivity continues in the weeks and months to follow as customers step up to the cash register.

To keep an eye on consumer behaviors around these brands, we can utilize the Social Signals technology inside of TD Ameritrade’s thinkorswim trading platform.  Here we are able to see updates to both mention volume and consumer happiness levels in near real-time, giving us incredible insight into consumer behaviors on Main Street, often before the numbers impact Wall Street reports or analyst opinions.

A great example of this is Pepsi, who was in the top eight of the TD Ameritrade Ad Challenge:

  This is a screenshot from thinkorswim software showing the stock price (top) and Social Signals data powered by LikeFolio (bottom). The yellow line is customer happiness, and the stack charts show overall mention volume. Red is negative, green is positive and blue is total.  

As you can see, when Pepsi’s CEO, Indra Nooyi, spoke out against the election of Donald Trump, the company saw massive amounts of negative mentions, slamming customer happiness levels and causing a “red flag” moment.  The stock then dropped drastically and quickly.  

Fortunately for Pepsi, the data points stabilized as the CEO clarified her comments, journalists corrected their misquotes, and Ms. Nooyi joined the Trump Administration’s business council.  Social improved dramatically from there over the next few months, and are near all-time highs, suggesting the Super Bowl pop might be part of a larger positive trend for the company.

Playing it from here

Using this kind of social data is powerful on a short term basis when things go crazy, but the bulk of its value comes from watching consumer trends over time and applying those insights to fundamental analysis with a 3-6 month outlook for the stock.

After all, the ultimate value of a company is not determined by analysts, traders or stock charts, but rather by the consumers that choose to buy the company’s products, or not.  Our job is to use powerful social data tools as described above to identify these consumer trends and behavior shifts before they become news on Wall Street. Consumers are speaking out loud and clear…all we have to do is listen to them.