Feeling shut out of this hot market? Maybe some FOMO — fear of missing out. You’re not alone. The S & P 500 keeps plowing through record highs in the first week of December after November posted the best monthly gains of the year. All that buying, however, has pushed the market into overbought territory, according to the S & P 500 Short Range Oscillator , a technical indicator Jim Cramer has used for decades to track trading momentum. Our discipline mandates that we consider booking profits in an overbought market, as we did with one of our big winners Microsoft on Tuesday. However, we also pick our spots to buy. On Wednesday, we bought more shares of our newest position, Bristol-Myers Squibb , on a recent dip. As long-term stock investors, the Club believes fundamentals are what matter most when it comes to making investment decisions. However, a peek at the technicals can also be useful. Methodology We are conducting this technical analysis from the perspective of a new money investor looking to initiate a position or someone with an existing position sitting in the loss column where another buy could help lower their cost basis. For those with existing positions, this exercise can help dictate when might be a good time to consider breaking basis, should you feel the need to get a bit more exposure. That, however, violates our discipline and should not be done lightly. Our analysis can also inform members when these stocks are trading at so-called “battleground levels,” which may prompt you to adjust your exposure accordingly. We looked at the charts of two of our buy-equivalent 1-rated stocks — Constellation Brands and Home Depot — to identify levels that can be bought. Constellation Brands buy levels: $230, $210 The Mexican beer powerhouse on Nov. 26 successfully tested $230 per share, a key technical support level for the past two years. There is also a longer-term uptrend that comes into play at the $230 level, which is represented by the pink line. The late November support test came on elevated trading volume. We look at volume as sort of a stock lie detector, because moves made on higher volume are more trustworthy From a price-to-earnings ratio perspective, we already like the stock — and as Jim Cramer noted on the Morning Meeting for Club members on Nov. 26: Constellation’s cash flow alone is reason enough to be interested in the stock at these levels. On a fundamental basis, the stock is already well below its five-year historical valuation on 2025 earnings estimates. On the technical side, however, the stock is currently below both its 50-day and the 200-day moving averages. That means there is resistance above us at $242 and $250 that will need to be overcome before shares make an attempt at prior highs. Fundamental worries about the 25% tariffs on Mexican imports that President-elect Donald Trump proposed Monday evening are certainly a consideration that can’t be ignored, however, that’s arguably being priced in with…
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