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September Penny Stocks To Watch

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Strong biotech activity drove penny stocks in August, lifting many to 2017 highs, according to Investopedia. Other low-priced stocks underperformed, held back by political dysfunction and late summer illiquidity that sidelined investment activity.

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Half of August’s penny stock picks returned in September, all to higher spots on the list. RADA Electronic Industries, Ltd. led the pack, gaining more than 40% for a two-year high. 22nd Century Group Inc. jumped 23% during the period, while Trilogy Metals Inc. racked up and additional 17%.

Large scale catalysts could drive fresh speculation. The iShares Nasdaq Biotechnology ETF, for instance, began the last week of August in a strong position shortly after Gilead Sciences Inc. announced its acquisition of Kite Pharma, Inc. Such events impact low-price issues that are easier for small traders to purchase and hold versus large pharma manufacturers.

1. RADA Electronic Industries, Ltd. (RADA)

Source: Investopedia

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RADA Electronic Industries, Ltd. (RADA), a defense electronics system of advanced electronic systems for airborne and land applications, moved from the number two spot in August to number one in September.

The stock fell into a multi-decade decline after it joined Nasdaq in the 1990s. It ground out a series of lower highs and lows through January 2016’s all-time 54-cent low.

The stock spent 16 months moving sideways in a narrow basing pattern before turning higher in May 2017 and rallying back to 2016 resistance at $1.78.

The stock cleared major resistance at $2.25 in July 2017, entering an uptrend that’s now filling the July 2015 gap between $2.50 and $3.60. Buying pressure remains strong, raising odds it will test 2015 resistance near $4.00.

Following capital raising activity with institutional investors, the company converted loans to equity and increased its net cash position by $13.3 million while reducing ongoing annual interest payments by approximately $250,000.

On Aug. 21, RADA completed a $10 million capital raise under an existing shelf prospectus, issuing 4,604,500 shares. The investors included leading Israeli institutional investors, such as Yelin-Lapidot Investment House, More Investment House, Noked Capital, and The Phoenix Insurance Company.

From Aug. 17 until Sept. 5, DBSI, the company’s primary shareholder, exercised warrants and converted a loan to equity. It sold a portion of the shares gained to institutional investors such as Optimus Fund and others. On a net basis over the period, DBSI increased its shareholding in RADA by 1,168,782 shares to approximately 12.2 million shares, representing 35% of the company’s equity on a fully diluted basis.

2. 22nd Century Group, Inc. (XXII)

Source: Investopedia

22nd Century Group, Inc. (XXII), a biotechnology company that provides tobacco harm reduction and development of proprietary hemp/cannabis strains, rose from the number three spot in August to number two in September.

The stock broke out above multi-year resistance near $1.50 in 2013, rallying to a record high a few months later at $6.36. It then began a persistent decline through August 2015 before finding support at 56 cents, followed by a bounce to $1.75.

The stock traded within these boundaries for 22 months, bouncing at support three times and reversing at resistance in equal measure. The price returned to that level a fourth time, improving odds for a breakout that could double the price in the year’s second half.

22nd Century Group found support near 70 cents in the second half of the year, testing that level three times ahead of a March 2017 uptick that has now reached range resistance. A breakout over $2.00 should draw strong buying interest favoring a high percentage rally back to its three-year high.

The stock hit its highest high since 2014 on Aug. 7, 2017, and pulled back to the 20-day SMA, testing support around $2.00. This price level could offer a platform for continued upside that reaches longer-term resistance near $4.00.

The stock joined the Russell Microcap Index three months ago when FTSE Russell reconstituted its U.S. and global equity indexes.

Membership in the Russell Microcap Index signifies automatic inclusion in the value style indexes. FTSE Russell determines membership for its Russell indexes primarily by objective, market-capitalization rankings and style attributes.

22nd Century Group focuses on genetic engineering and plant breeding that allows the increase or decrease of nicotine levels in tobacco plants and cannabinoids levels in cannabis plants. Its primary goal for tobacco is to lessen the harm caused by smoking. The primary goal for cannabis is to develop proprietary hemp/cannabis strains for new medicines and agricultural crops.

3. Trilogy Metals, Inc. (TMQ)

Source: Investopedia

Trilogy Metals Inc., an exploration stage company which engages in the development and exploration of mineral properties, joined the list at number five in August and moved to the number three spot in September.

The Vancouver, Canada-based company went public on the U.S. exchanges in April 2012 at $3.20, beginning an immediate downtrend to an all-time low at 15 cents in January 2016. A recovery wave mounted the 200-day EMA at 60 cents that stalled three months later, yielding a narrow basing pattern into a July 2017 recovery that reached a two-year high at $1.22.

The rally hit a three-year high at $1.35 on Aug. 7, yielding a pullback that’s testing 50-day EMA support, with a bounce at or above 90 cents, setting the stage for a strong buying impulse.

The company reported a strong working capital position of $20.1 million in the second quarter, with cash on hand of $14.5 million.

For the three months ending May 31, 2017, the company reported a net loss of $2.4 million compared to a net loss of $1.6 million for the corresponding period in 2016. This variance was primarily due to the size of the field programs at the Upper Kobuk Mineral Projects in 2017 as well as the timing of the program. An increase of $840,000 of mineral property expenses occurred during the three months ended May 31, 2017 compared to the three months ended May 31, 2016. In 2017, the field program at Arctic and Bornite began with drilling by early June compared to 2016 where the field program kicked off in early July.

The company announced a financial partnership with South32 Limited for an option to form a 50/50 joint venture for a minimum investment of $150 million. South32 is required to fund a minimum of $10 million per year, for up to three years to keep the option in good standing. The first $10 million has been advanced to the company and will be spent on a 12,000-meter exploration drill program at the Bornite deposit, which is already under way.

4. Intrepid Potash, Inc. (IPI)

Source: Investopedia

Intrepid Potash, Inc., the only U.S. producer of muriate of potash, moved from the number nine spot in August to number four in September.

The company sold off to 2008 support at $13.80 in 2014. Two years later, the stock began a decline that reached an all-time low at 65 cents in March 2016. The stock rose above $1.50 in June before settling in a sideways pattern ahead of a December 2016 breakout that soon stalled at $3.04.

A stair step bounce reached a 21-month high at $3.93 on Aug. 3, giving way to rectangular consolidation with support near $3.15. The stock is now testing range resistance, with a breakout to more upside that could reach the 200-week EMA, now descending from $8.00.

Intrepid generated a second quarter net loss of $5.9 million, or $0.05 per share, delivering a first-half net loss of $19.6 million, or $0.19 per share. This marked an improvement over the net losses of $13.4 million, or $0.18 per share, and $31.8 million or $0.42 per share, in the second quarter and the first half of 2016, respectively.

Improvements in year-over-year net loss per share were driven in part by a gain in outstanding shares from the March 2017 secondary offering.

Consolidated gross margin advanced to $3.7 million and $0.8 million in the second quarter and the first half of 2017, respectively, against the prior year. Improvements were due to lower cost solar potash production and higher average net realized potash pricing that offset lower average net realized sales prices for the product, Trio.

Cash provided by operating activities rose year-over-year to $9.7 million and $11.5 million for the second quarter and the first half of 2017, respectively. Increased cash flow was due to strong spring demand, increased potash prices, and the elimination of costlier conventionally mined potash from the production profile.

5. Tantech Holdings, Ltd. (TANH)

Source: Investopedia

Tantech Holdings, Ltd., a manufacturer of bamboo-based charcoal products for industrial energy applications and household cooking, heating, purification, agricultural and cleaning uses, moved from the number 10 spot in August to the number five spot in September.

The company went public at $6.00 in March 2015 and began an uptrend that topped out at $33.97 five months later. In the next three months, the stock relinquished more than 90% of its value. Bears maintained control into the April 2017 all-time low at $1, followed by a recovery that reached a 10-month high in July.

Pricing has tested resistance at the September 2016 breakdown through the October 2015 low, with a buying surge setting the stage for upside into the $6 range.

The stock hit an all-time low at $1.00 in April 2017. Bullish action since that time has reached 2016 resistance, with a breakout raising odds for a rally into the 2016 high at $6.00.

6. Cancer Genetics, Inc. (CGIX)

Source: Cancer Genetics

Cancer Genetics, Inc. (CGIX), a provider of personalized medicine, offers diagnostic products and services that enable precision medicine in the field of oncology.

The stock topped out at $23.25 in 2013 and ground sideways into a 2014 breakdown that accelerated into the second half of 2016. The stock dropped to an all-time low at $1.10, then turned higher in 2017, lifting above the 200-day EMA and reaching a 17-month high at $5.30 in March.

Price action since March has carved a long series of lower highs, generating a trendline with resistance at $3.90. A rally above the 2017 high would set the stage for rapid gains that could eventually reach double digits.

The company reported second quarter revenue of $6.6 million, with record biopharma demand with $7.1 million in new contract bookings for its biopharma services.

Clinical services revenue was up 20% in the quarter to $3 million over the same quarter in 2016. The company reduced its second quarter loss from operations by 22% compared to 2016.

The company is now supporting more than 170 clinical trials serving nine of the top 10 biopharma companies in the world.

7. Moleculin Biotech, Inc. (MBRX)

Source: Investopedia

Moleculin Biotech, Inc. (MBRX) went public in June 2016 at $8.99 and began a downtrend that continued to post new lows into May 2017 before it bottomed out at 71 cents. A June test held support ahead of an uptrend that completed a high volume base breakout which saw the stock rally to an 8-month high at $3.75 by the month’s end.

A pullback in July found support at the 50-day EMA, causing a bounce to range resistance, followed by a decline that could attract strong buying and continued upside toward $6.00.

The company recorded a net loss of $3.3 million in the second quarter of 2017 for the change in fair value on revaluation of its warrant liability associated with warrants issued in conjunction with its stock offering in February 2017.

The company recorded a gain in the second quarter of 2017 of $1.2 million related to the expiration of warrants issued as part of the February 2017 stock offering.

The net loss for the three months ended June 30, 2017 was $2.3 million, including non-cash income of $1.2 million related to a gain recognized on the expiration of warrants, which was offset by a non-cash expense of approximately $3.3 million on the change in fair value of the company’s warrant liability. The net loss also included additional noncash charges for $0.1 million for stock-based compensation and other stock-based expenses.

As of June 30, 2017, the company had $9.3 million in cash and cash equivalents compared to $5.0 million at Dec. 31, 2016. Through June 30, 2017, $3.2 million in cash was received from the exercise of warrants issued in the February public offering. Cash used in operations was $3.4 million for the period ending June 30, 2017.

8. Vivint Solar, Inc. (VSLR)

Source: Investopedia

Vivint Solar, Inc. (VSLR), which provides homeowners with simple and affordable clean energy, opened for trading in October 2014 at $17.01, ahead of a severe downtrend that bottomed out near $7.50 in December 2014. Lower lows in the second quarter of 2016 gave way to a basing pattern, followed by a June 2017 breakout that’s now testing 50-day EMA support. A bounce at this level could gain traction, testing the 2017 high ahead of additional gains into the $7.75 to $8.00 resistance zone.

Operating leases and incentives revenue was $43.4 million for the second quarter, up 45% from $30 million in the second quarter of the prior year. Total revenue for the quarter was $73 million, up 109% from $34.9 million in the same quarter of the prior year.

Cost of operating leases and incentives was $33.8 million for the quarter, down from $38.5 million in the same period of 2016.

Total operating expenses, including the cost of revenue, were $87.3 million, compared to $71.4 million in the same quarter of 2016.

Loss from operations was $14.3 million compared to $36.5 million in the same period of 2016.

As of June 30, 2017, Vivant Solar had $15 million in undrawn capacity in the working capital facility, and $308 million in undrawn capacity in the aggregation facility. The company also had approximately 109 MWs of installation capacity remaining in its tax equity funds.

9. China Information Technology Inc. (CNIT)

Source: Investopedia

China Information Technology Inc. (CNIT), a provider of Internet-based ad distribution and ad display terminal sharing systems in China, topped out at $16 in 2009 and broke down two years later, beginning a decline that continued into the 2012 low at 71 cents. A three-year bounce ended in a triple top reversal near $7.00 that gave way to November 2015 and March 2017 tests at the deep low.

Support held after a final washout, resulting in a two-legged recovery that has reached a 52-week high. Buying volume indicates the current pullback to 98 cents will mark an opportunity ahead of a rally that could reach the 200-week EMA over $2.00.

The company recently entered into a contract for the sale of 3,000 CNIT cloud-based ad terminals to be installed in office buildings, residential communities, shopping malls and outdoor locations throughout Tianjin Municipality, the primary industrial, commercial and economic center of North China.

The company has projected 2018 revenue of $30 million to $33 million and adjusted net income of $9 million to $11 million, with sales of 120,000 cloud-based ad terminals in 100 cities covering 200 million people throughout China.

10. Zynga, Inc. (ZNGA)

Source: Investopedia

Zynga, Inc., a company whose mission is to connect the world with games, became public in December of 2011. The FarmVille creator reached an all-time high at $15.91 in March 2012, then dropped in a straight line to $2.09 in November, ahead of a bounce that stalled near $6.00 in 2014.

The stock found support at the 2012 low in the first quarter of 2016, then turned higher, rallying to a three-year high in June 2017. Price action since then made a symmetrical triangle on top of the 200-week EMA.

The company achieved record mobile revenue and bookings in the second quarter, with revenue up 30% year-over-year and bookings up 33% year-over-year.

Mobile now represents 86% and 87% of total revenue and total bookings, respectively. Mobile online game revenue was up 39% year-over-year, and mobile user pay bookings were up 45% year-over-year. The company’s mobile audience reached 19 million average daily active users, up 28% year-over-year and the strongest since Q4 2014.

GAAP operating expenses for the quarter were 67% of revenue – down from 73% of revenue for the same period in Q2 2016, while non-GAAP operating expenses were 58% of bookings – down from 68% of bookings a year ago.

The company delivered its first quarter of GAAP pre-tax profit since Q4 2012, due in part to progress in improving operating leverage and the lowest quarter of stock-based compensation expense in more than three years.

The company generated operating cash flow of $37.8 million, which was its best quarterly performance in five years.

Penny stocks require investors to make some guesses about the future. Very few such stocks have a sufficient track record to indicate they will prosper. At the same time, the stocks on this list are in significant industries and have the potential to be vital players in their respective industries.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.8 stars on average, based on 4 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Stock Picks: Buy SJM and LB

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The S&P 500 (SPX) has recovered big last week after two consecutive large red candles on the weekly chart. Bulls managed to preserve support of 2,600 as the market bounced from a low of 2532.69 even in the midst of heavy selling pressure. In addition, RSI appears to have rallied from a low of 38.33. This is an encouraging sign as it indicates that momentum is creeping up. Nevertheless, the index must move above 2,872 to relieve selling pressure, and keep the uptrend alive.

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As the index still hesitates, let’s look at names that are near their firm support levels.

SJM – JM Smucker Company

J.M. Smucker Company is a 120-year-old company that manufactures and markets fruit spreads, peanut butter, shortening and oils, ice cream toppings, sweetened condensed milk, and health and natural foods and beverages. A household brand name in North American homes, its portfolio includes brands such as Smucker’s, Jiff, Crisco, Pillsbury, R.W.Knudsen Family, and Dunkin’ Donuts. The company is committed to strengthening families through moments shared around memorable, wholesome, and quality meals.

SJM lost its bullish momentum in February 2017 when it generated a lower high of 143.68. This signaled investors that the uptrend that began in August 2012 was over. Many cut their positions as seen on the eleven consecutive red weekly candles that spanned from February to May 2017. While SJM eventually bounced, it generated another lower high of 134.12 in June. From then on, the stock plunged until it bottomed out at 99.57 in November 2017.

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Technical analysis reveal that SJM has broken out of a bullish reversal pattern in December 2017. In addition, it created a bullish higher low set up at 114.33 two weeks ago. These factors suggest that the stock has regained its bullish momentum.

The strategy is to buy as close to 120 support as possible. With a higher low in place, the market will likely start its climb to our target of 155. The process may take six months.    

Weekly SJM Chart

Monthly SJM Chart

As of the time of writing, SJM is trading at 123.72.

Summary of Strategy

Buy: As close to 120 as possible.

Target: 155

Stop: A close below 115 negates this trade call.

 

LB – L Brands Incorporated

L Brands Incorporated is a Fortune 500 fashion retailer American company. One of the leading fashion retail brands worldwide, their flagship brands include Victoria’s Secret, Bath & Body Works, Pink, Henri Bendel, and La Senza. Established in 1963, the company continues its tradition of offering it’s clientele not only high-quality products, but captivating experiences as well.

LB topped out when it posted a lower high of 88.74 in April 2016. The downtrend was confirmed when it breached support of 80 in the same month. Since then, the stock created lower highs and lower lows until it found its bottom at 35 in August 2017. Having lost more than 60% of its value, the stock rallied after bottoming out.

Technical analysis show that LB has also broken out of a bullish reversal pattern when it went as high as 57.19 in November 2017. More importantly, it recently generated a bullish higher low set up at 45. This move may attract more bottom pickers which can inspire a big rally.

The strategy is to buy as close to 45 support as possible. As long as this level holds, the market has momentum to march to our target of 100. The entire process may take one year.

Weekly LB Chart

Monthly LB Chart

As of the time of writing, the L Brands Incorporated stock is trading at 47.97.

Summary of Strategy

Buy: As close to 45

Target: 100

Stop: A close below 42 negates this trade call

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 68 rated postsKiril is a financial professional with 4+ 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 ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. 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.




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Stock Picks: Invest in HCP and IRM

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The S&P 500 Index (SPX) has bounced from as low as 2,532.69 on February 9 to as high as 2,754.42 on February 16. However, it closed at 2,732.22 on the same day. The price action created a long wick above the daily candle’s body indicating the presence of sellers in the area. More importantly, the daily chart is showing signs of a lower high. Unless SPX can get above 2,872 soon, expect bears to take over, and drive the index down.

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As the SPX is not yet out of the woods, let’s look at issues that are near firm support levels

HCP – HCP Incorporated

HCP Incorporated is an S&P 500 Real Estate Investment Trust (REIT) that serves the healthcare industry in the United States. Since 1985, their services are characterized by high barriers to entry, favorable demographic trends, and solid real-estate fundamentals. Their portfolio includes senior housing, life science, medical offices, and hospitals – one of the largest portfolios in healthcare real estate to date.

HCP exhausted its uptrend in January 2015 when it generated a lower high of 45.16. The bearish move put investors on notice, and in May 2015, the stock broke below support of 36. From then on, it created a series of lower highs and lower lows until it eventually found its bottom at 22.86 in February 2016. The stock bounced after that, but it had trouble closing above 36 in the coming months. As bears defended the critical resistance level, HCP has dropped back down to 22.

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Technical analysis reveal that HCP’s plunge has opened an opportunity for bottom pickers. It appears that the stock is respecting support of 22. Volume surged from 19.72 million to 34.90 million when it touched this level. This shows that bulls are ready to defend the support level. On top of that, the stock is in oversold territory, suggesting a bounce is on the horizon.

The strategy is to buy as close to 22 as possible. Should bulls successfully defend this level, the stock will most likely resume its march towards the top end of our range, and our target of 36. The entire process may take six months

Weekly HCP Chart

Monthly HCP Chart

As of the time of writing, the HCP Incorporated stock is trading at 22.68.

Summary of Strategy

Buy: As close to 22 as possible.

Target: 36

Stop: A close below 21.50 negates this trade call.

 

IRM – Iron Mountain Incorporated

Iron Mountain Incorporated is an information management services company founded in 1959. With a portfolio that includes their trademarked Iron Cloud Storage, information management, digital transformation, secure data centers, and secure destruction. They promise to deliver data protection in various industries including federal government, banking, energy, entertainment, insurance, healthcare, law firms, life sciences, retail, and small businesses.

IRM relaunched its bull run in March 2016 when it breached resistance of 32. The move attracted breakout players, which pushed the stock to as high as 41.50 in August 2016. However, bears defended that major resistance level, which forced the stock to drop to as low as 30.75 in November 2016. With IRM down to a major support level, investors bought positions which enabled the stock to rally and go as high as 41.53 in November 2017. Like clockwork, bears claimed the resistance, and sent the stock back down to 32.  

Technical analysis show that IRM is respecting support of 32. The heavy volume over the last two weeks when the stock dipped to this level validates that assumption. Moreover, the stock is flashing near oversold readings which means a bounce might happen soon.

The strategy is to buy as close to 32 support as possible. Once selling is over, the stock will most likely move towards our target of 41.50. The process might take six months.  

Weekly IRM Chart

Monthly IRM Chart

As of the time of writing, the Iron Mountain Incorporated stock is trading at 33.17.

Summary of Strategy

Buy: 32

Target: 41.50

Stop: A close below 31.5 negates this trade call

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 68 rated postsKiril is a financial professional with 4+ 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 ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. 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.




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Stock Picks: Buy HST and HBI

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After hitting a low of 2,532.69 on February 9, the S&P 500 Index (SPX) appears to be in the middle of a bounce as it rebounded to 2,672.61 yesterday, February 12. While bulls are still in control, the index appears to show signs of hesitation. Volume is just slightly above the 20-day moving average at 2.687 billion. Moreover, yesterday’s price action created a spinning top candle indicating the presence of sellers above 2,656, and the presence of buyers below 2,636. Today’s candle should provide more clarity on the index’s direction.

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While the SPX hesitates, let’s look at stocks that are near key support levels.

HST – Host Hotels and Resorts Incorporated

Host Hotels & Resorts, Incorporated is a S&P 500 and Fortune 500 real estate investment trust (REIT). As of February 2017, the company owns approximately 53,500 rooms spread in 96 upscale and luxury hotels worldwide. Their committed maintenance of their superior diversified portfolio, disciplined capital allocation, and strong asset management capabilities landed them in RobecoSAM’s 2018 Sustainability Yearbook among the world’s most sustainable companies.

HST lost its bullish steam in March 2015 when it generated a lower high at 21.91. The bearish head and shoulders pattern on the weekly chart was triggered when the stock broke below support of 19 in August 2015. HST plunged as investors started to dump shares. It took the stock five months to find its bottom at 12.17 in January 2016. As the stock bottomed out, the stock quickly rallied.

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Technical analysis show that HST managed to reverse its trend and ignite a bull run when it breached resistance of 19 in October 2017. While the stock reached as high as 21.53 in January 2018, it flashed oversold readings which forced a dip. HST went as low as 18.74 this month before bulls rushed to defend support at 19. This slight correction is your chance to enter the market near a critical support level.

The strategy is to buy as close to 19 as possible. Should bulls successfully defend this level, the stock will most likely resume its march towards our target of 25. The entire process can take three months.

Weekly HST Chart

Monthly HST Chart

As of the time of writing, the Host Hotels and Resorts Incorporated stock is trading at 19.31.

Summary of Strategy

Buy: As close to 19 as possible.

Target: 25

Stop: A close below 18.75 negates this trade call

 

HBI – HanesBrand Incorporated

Hanesbrands Incorporated is an S&P 500 and Fortune 500 American clothing company. They are the world’s leading innovator, manufacturer, and marketer of basic apparel. Included in their portfolio are the brands Hanes, Champion, Playtex, Bali, L’eggs, Just My Size, Hanes Hoisery, Barely There, Wonderbra, Duofold, Aire, Beefy-T, C9 by Champion, Cacharel, Celebrity, Daisyfresh, J.E. Morgan, One Hanes Places, Maidenform, Rinbros, Ritmo, Sheer Energy, Silk Reflections, Sol, Sol y Oro, Tagless, and Zorba.

HBI exhausted its bullishness in November 2015 after posting a lower high at 33.24. It then went in a downtrend after breaking below support of 26 in February 2016. While the stock bounced, it created another lower high at 30.42 which validated the trend. From that point on, the HBI generated a series of lower highs and lower lows until it bottomed out at 18.91 in January 2017.

Technical analysis show that HBI has broken out of the downtrend channel that it respected for almost two years when it closed above 21 in June 2017, effectively reversing its trend. It went as high as 25.73 in September before succumbing to selling pressure. While it retreated, it seems to respect support of 19. More importantly, the stock appears to have capitulated on the week of February 5, 2018 as its weekly volume skyrocketed to 83.558 million when the average was just 33 million.

The strategy is buy as close to 19 support as possible. Once selling is over, the stock will most likely resume its march towards our target at 32.50. The process might take more than one year.

Weekly HBI Chart

Monthly HBI Chart

As of the time of writing, the Hanesbrands Incorporated stock is trading at 19.92.

Summary of Strategy

Buy: 19

Target: 32.5

Stop: A close below 18.50 negates this trade call

 

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 68 rated postsKiril is a financial professional with 4+ 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 ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. 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.




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