Ride Reversing Stocks With Huge Profit Potential

The S&P 500 Index (SPX) continues to show signs of weakness as it remains under 2,600 levels. Technical indicators show an overbought index struggling to sustain its momentum. SPX closed slightly below its immediate support of 2,580, which increases the likelihood of a bigger move down in the following trading days. With the index sputtering at the top, it is advisable to stick to names with limited risks but that offer an enormous upside.

BIIB – Biogen Inc

The stock crashed in 2015 several weeks after posting its all-time of 480.18. It shed more than half of its value before finding support at 206. BIIB has rallied since and established an important higher low at 243. The level served as its springboard to go as high as 330 where it met stiff resistance from the bears. It appears that the stock has generated a new higher low at 306 in preparation for the next leg up.

Weekly and monthly charts show a huge reversal pattern indicating that it’s only a matter of time before the stock turns bullish. BIIB is expected to consolidate at 306 with immediate resistance at 319. That’s a good buy zone where you can accumulate shares. Technical analysis reveals that once the stock breaches resistance at 350, we will get to 375 first, 400 next, and 429 last before creating a clear path to the target of 494.

If BIIB breaks 306, next level of support can be found at 300 first and then 288 next. The line in sand for this trade is 280. Break that level and the next reliable support is 250.

Weekly BIIB Chart

Monthly BIIB Chart

Summary of Strategy

Buy: between 306 – 319

Support: 300, 288, and 280

Resistance: 350, 375, 400, and 429

Target: 494

Useless: Breach of 280 support negates this trade call

HRB – Block H&R Inc

Just like BIIB, the name came crashing down several weeks after posting its all-time high at 37.53. It shed half of its value and has rallied since. It went as high as 31 before it met heavy resistance from bears. Nonetheless, the stock established an important higher low at 23, and it is currently creating a new base in preparation for its next big move up.  

The stock is trading between 23 – 27 which is a good range to accumulate shares. A move above 27 will take the name to 31 and then to its major resistance at 35. Breach of the major resistance level gives the stock all the momentum it needs to a new record high of 51.

On the other hand, a move below 23 can take the stock to 22.5 first and then 21.5. Line in sand is major support at 20.

Weekly HRB Chart

Monthly HRB Chart

Summary of Strategy

Buy: 23 – 27

Support: 22.5, 21.5, and 20

Resistance: 31, 35, and 37.5

Target: 52

Useless: Breach of support at 20 invalidates this trade call

Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.