Stock Picks: STX and RRC

The S&P 500 (SPX) went as high as 2,796.98 yesterday, March 12 but it shed 13 points to close the day at 2,783.02. The index is just a few points shy of breaching 2,800 resistance. It must do so in the next few days, or we might see an increase in selling pressure.

As we wait for the index to give us more clarity, let’s look at names that are near firm support levels.

STX – Seagate Technology PLC

Seagate Technology is an American public limited company (PLC) data storage company. As a global leader in data storage solutions, they have products ranging from hard disk drives (HDDs), solid state hybrid drives (SSHDs), solid state drives (SSDs), peripheral component interconnect express (PCIe) cards and serial advanced technology architecture (SATA) controllers. Incorporated in 2010, the company believes that data storage is not only about archiving, but about harnessing stored information for growth and innovation. Their service portfolio also includes Enterprise Storage, Client Compute products (Desktop and Mobile HDDs and SSHDs), and Client Non-compute products such as video HDDs, surveillance HDDs, Network Attached Storage (NAS) HDDs and Branded Solutions.

STX went in a downtrend in June 2015 when it broke below 50 support. This triggered the toppish head and shoulders pattern. The stock then created a series of lower highs and lower lows until it bottomed out in May 2016 at 18.42. STX rallied and climbed to as high as 50.96 in April 2017. Even though the stock pulled back, it created a higher low at 30.60, which it used to reverse the trend.

Technical analysis show that STX has broken out of large bullish reversal pattern when it took out resistance of 50 in January and February 2018. It did so with above average volume which helped absorb selling pressure. Currently, STX is trading at 60, but it is flashing overbought readings. The next pull back should be a good entry point.

The strategy is to wait for the dip and buy as close to 55 as possible. Once selling is over, the stock may resume its ascent to our target of 80. This may take less than six months.

Weekly STX Chart

Monthly STX Chart

As of this writing, the Seagate Technology stock is trading at 61.04.

Summary of Strategy

Buy: As close to 55 as possible.

Target: 80

Stop: 50

 

RRC – Range Resources Corporation

Range Resources Corporation is an independent natural gas, natural gas liquids (NGLs) and oil company in the United States. Incorporated in March 1980, the company explores, develops, and acquires natural gas and crude oil properties in the Appalachian and North Louisiana regions of the United States. Their culture of good stewardship which incorporates performance, integrity, innovation, and transparency made them one of the top high sustainability scorers in As You Sow’s annual Transparency and Risk in Methane Emissions report.

RRC lost its bullish momentum in June 2016 when it generated a lower high of 46.96. Things took a turn for the worse when the stock broke below 42 support in the next month. This triggered the head and shoulders reversal pattern on the daily chart, which sent the stock into a freefall. The stock has been creating a series of lower highs and lower lows. Recently, however, RRC appears to have shown signs of capitulation.

Technical analysis show that RRC may have capitulated on January 25 when it printed volume of 33.16 million. This is the highest traded daily volume since early 1990s based on the chart. In addition, the stock has also reclaimed 15 support. This support level has been defended by bulls since 2005.

The strategy is to buy as close to 15 support as possible. The stock lost over 68% of its value from the lower high of 46.96. Therefore, the stock might take some time to consolidated before it can march to our target of 30. The process may take more than six months.

Weekly RRC Chart

Monthly RRC Chart

As of this writing, the Range Resources Corporation stock is trading at 15.73.

Summary of Strategy

Buy: 15

Target: 30

Stop: 13

 

Featured image courtesy of Shutterstock.

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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.