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Trade Recommendation: Buy Bottoming FE and GE

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The S&P 500 Index (SPX) maintains its bullish tone by opening at 2,685.92 yesterday which is 10 points higher than the previous day’s close. It went to a high of 2,694.97 before closing at 2,690.16. The index continues to climb, but technical indicators are starting to show signs that profit taking might commence soon. The index remains in overbought territory. Plus, RSI is knocking on immediate resistance at 76. A dip is in order to keep the ascent sustainable.

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Whether we see profit taking in the next few days, the index is still controlled by bulls. Let’s look at stocks flashing signs that their downtrend is over.

FE – FirstEnergy Corporation

FirstEnergy Corporation is an energy company with over six million customers in Ohio, Pennsylvania, West Virginia, Maryland, and New Jersey. The company is one of the country’s largest investor-owned utility.

To say that FE investors have had a bad decade would be an understatement. The stock lost 66.75% of its value from a high of 84 in 2008 to a low of 27.93 in May this year. The worst may be behind for investors, as the stock appears to have bottomed out.

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Technical analysis reveal that the stock continues to respect support at 29. That support level has stood the test of time as FE has been using it to stabilize its price since 2002. Moreover, the weekly chart reveals a throwback after the stock hit resistance at 34. This might be the final pullback before FE finally reverses its trend.

The strategy is to buy as close to support at 30 or wait for breakout at 34 with volume of 9 million in the daily chart. Once the stock breaches 34, we have a minimum target of 40. Break 40 and we get to 52.

Weekly FE Chart

Monthly FE Chart

As of December 18, 2017, the FirstEnergy Corporation stock closed at 31.51.

Summary of Strategy

Buy: close to 30 or breakout at 34 with 9 million in volume

Support: 30 and 29

Target: 40 and 52

Stop: A close below 29 negates this trade call.

GE – General Electric Company

General Electric Company is a multinational conglomerate with presence in multiple industries including aviation, energy, lighting, healthcare, transportation, pharmaceutical, software development, and many others. Its stock has been in a downtrend since 2016 when it generated a massive bearish structure above 30. It lost 45.63% of its value as it nosedived to 17.46 from a high of 33. However, recent price action shows that the stock has probably bottomed out.

Weekly chart show massive selling volume on the week of November 13th, 2017. Since then, the volume has significantly decreased week after week while the stock stabilizes at 17, which is a support level that has not been breached since 2012. In addition, the stock is in extreme oversold territory and RSI shows signs of stability. All in all, we have enough evidence to suggest a bottom.

The strategy is to buy above 17 and trade the consolidation period. The initial target is 20 and the maximum target is 24.

Take note: the stock is still in a downtrend. However, there’s an opportunity to make money by riding the rally.

Weekly GE Chart

Monthly GE Chart

As of December 18, 2017, the General Electric Company stock closed at 17.71.

Summary of Strategy

Buy: above 17

Support: 17

Target: 20 and 24

Stop: A close below 17 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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Ride PBCT and OKE on Bullish Reversal Patterns

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The S&P 500 Index (SPX) continues to be aggressively bullish as the market records seven fresh highs in a matter of eight trading days. Momentum is sky high, and the market continues to climb even though it is in extreme overbought territory. While this may sound bullish, such an ascent is not sustainable. The market will eventually have a correction and buying at the top is not a great strategy. If you don’t want to be left behind however, be smart and buy stocks that offer limited risks but reasonable rewards.

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Let’s look at names that are near their breakout point.

PBCT – People’s United Financial Incorporated

People’s United Financial Incorporated (PBCT) is the bank holding company for People’s United Bank. The company was founded in 1842 and has 4,729 employees. PBCT operates in the commercial and retail banking segments, serving individual, municipal, and corporate clients.  

The stock has been in a downtrend since it generated a lower high of 21.76 in September 2008. It plunged to one lower low after another until it found support at 11 in August 2011. After going through a long accumulation period, it came back to life in November 2016 when the stock went from 16.48 to 18.43 in a week. More than one year later, it appears that PBCT is ready for its next big move.

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Technical analysis show that the stock has created an immense bullish reversal pattern that started way back in 2008. Resistance at 20 was created when the market failed to close above that level almost a decade ago. Fast-forward to 2018, the stock gets another chance to reclaim that level. The stock needed close to ten years to get to the verge of taking out resistance at 20.

These multi-year consolidation periods sometimes yield tremendous gains in the short term. The key for PBCT is to break resistance of 20. To do so, the market needs 10 million in volume on the daily chart. Those who bought at immediate support of 17.50 are likely to sell some of their positions. The stock needs a fresh set of investors who can absorb the selling pressure.

The strategy is to buy breakout at 20 with the required volume. Take out that resistance level, and we have a target of 29.

Weekly PBCT Chart

Monthly PBCT Chart

As of January 12, the stock of People’s United Financial Incorporated closed at 19.48.

Summary of Strategy

Buy: Breakout at 20 with 10 million in volume in the daily chart.

Target: 29

Stop: After breakout at 20, a close below $18.75 negates this trade call.

OKE – ONEOK Incorporated

ONEOK Incorporated (OKE) is a diversified energy company that owns and operates one of the country’s modern natural gas liquid systems. It is also involved in collecting, processing, storing, and transporting natural gas. The company was founded in 1906 to provide safe and reliable energy and services to its customers.

OKE went into a downtrend in October 2014 when the stock registered a lower high of 61.56. It tumbled to one lower low after another until it established support at 20 in December 2015. The stock consolidated at that level until April 2016 when it made a big push up. OKE went from 30.57 to 36.03 in one week. Since then, the stock has been gradually rising, and it is currently threatening to take out resistance at 60.

Technical analysis show that OKE has created a large bullish reversal pattern that started in 2014 when the stock posted a lower high at 61.56. Breach of resistance at 60 will attract momentum traders, and could push the stock up to 100.

The strategy is to wait for breakout at 60 with volume of 10 million in the daily chart. Those who bought at immediate support at 55 are likely to dump some of their shares at 60 to lock in gains. OKE needs a new batch of investors who would most likely sell above 60.

Otherwise, wait for the market to take a slight dip so you can buy as close to 55 as possible. The market is currently in overbought territory, which increases the likelihood of a pullback.

Weekly ONEOK Chart

Monthly ONEOK Chart

As of January 12, the ONEOK Incorporated stock closed at 58.67.

Summary of Strategy

Buy: breakout at 60 with 10 million volume or as close to 55 as possible.

Target: 100

Stop: A close below 52 invalidates 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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Trade Recommendation: Bottom Pick MOS and NWL

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The S&P 500 Index (SPX) hit another fresh high of 2748.51 points yesterday. This is the fifth fresh high of the index in the last five trading days. Yesterday’s volume is still above the 20-day average, which means that market participants are willing to buy at this level, expecting that the index will climb higher. All of this is happening while the index is in extreme overbought territory in the daily, weekly, and monthly charts. As an experienced trader, I would take this opportunity to sell the greed. The best time to sell is when you don’t have to.

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While selling the greed, use your capital and earnings to buy the fear. Let’s look at stocks that have fallen, but have managed to bounce back.

MOS – The Mosaic Company

The Mosaic Company (MOS) is a Fortune 500 firm and one of the world’s largest producers of two key crop nutrients: potash and phosphate. In mining those minerals, the company is able to produce high-quality fertilizer and animal feed. Half of which is sold to customers in North America while the other half is sold to customers around the globe.

MOS has been in a downtrend for over six years after generating a lower high of 74.31 on the weekly chart in July 2011. Things went from bad to worse when the stock broke critical support of 50 in July 2013. MOS then created one lower low after another until it tumbled down to 19 which is a support level that hasn’t been taken out since 2006.

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Technical analysis show that MOS continues to respect the 12-year old support level. The stock has bounced from 19 with significant volume on the weekly charts in September 2017. This indicates that market participants are investing because they believe the stock is cheap. However, RSI shows that the stock is also respecting immediate resistance of 67. MOS may take a slight dip, which is a good opportunity for you to buy. The strategy is to buy as close to support of 23 as possible.

Take note: the stock is still in a downtrend, but there’s an opportunity to generate profits by buying the bounce. Consider selling positions at 34 to lock in gains. If the market breaches that resistance level, the next target is 50.

Weekly MOS Chart

Monthly MOS Chart

As of January 8, The Mosaic Company closed at 26.29.

Summary of Strategy

Buy: as close to support at 23 as possible

Target: 34 and 50

Stop: A close below 19 negates this trade call.

 

NWL – Newell Brands Incorporated

Newell Brands Incorporated (NWL) is a global leader in marketing commercial and consumer merchandise such as food storage, home organization products, reusable containers, and office supply products. The company’s portfolio includes popular brands such as Coleman, PaperMate, Elmer’s, Rubbermaid, and Parker Pens.   

NWL has been in a downtrend since it created a bearish double top at 55 in June 2017. The stock lost almost half of its value when it plunged to just below 28, which is a very important support level. Since 1996, the stock surged whenever it went above this level. On the other hand, NWL tends to nosedive if that support level is breached.

So far, the stock appears to respect this support level. Massive increase in volume levels from end of October to end of November indicate capitulation. The significant drop in volume last week may suggest exhaustion. This is a good opportunity to bottom pick.

The strategy is to buy at current price level. Initial resistance is 35. Take out this level, and we have a target of 44.

Weekly NWL Chart

Monthly NWL Chart

As of January 8, the Newell Brands Incorporated stock closed at 32.08.

Summary of Strategy

Buy: 32.08

Target: 44

Stop: A close below 28 invalidates 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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Trade Recommendation: Ride Reversing Kellogg and KSS

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The S&P 500 Index (SPX) continues its remarkable climb, hitting new all-time highs. The higher daily open prices have coupled with above average daily volumes most of last week. Furthermore, the index managed to go above RSI resistance at 76, indicating strong momentum. However, keep a close eye on your positions as the index is extremely overbought on the daily, weekly, and monthly charts. A pullback is ideal to keep the surge sustainable.

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Pullback or no pullback, the market remains aggressively bullish. Let’s look at names that offer little risks with considerable rewards.

K – Kellogg Company

Kellogg Company (K) is a multinational food manufacturer that’s been operating for over 100 years. The company is responsible for producing popular snacks and breakfast icons such as Pringles, Special K, Corn Flakes, and Froot Loops.

After generating a five-year high of 87.16 in July 2016, K started showing signs of bearishness. All bullish momentum was lost when it posted a lower high of 76.69 in February 2017. The stock tumbled all the way down to 60 where bulls stepped in and defended the support area. K has been rallying since, and it appears ready to break resistance at 69.

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Technical analysis show that K has created a bullish reversal structure on the daily chart. For reversal to be confirmed, the stock must successfully take out resistance at 69. Technical indicators show that the stock is not yet overbought so there’s room for a heavy push up.

Bulls must generate volume of 11.5 million shares on the daily chart to complete the breakout. The reason for the large volume figure is because investors who bought at the October 31 bounce price of 60 are likely to take profits and dump their positions at 69. The stock needs a fresh set of investors who would hold on to their shares and sell at a higher price.  

The strategy is to buy breakout at 69 after confirming volume requirement of 11.5 million shares. Target is stiff resistance at 80.

Daily Kellogg Chart

Weekly Kellogg Chart

As of the time of writing, the Kellogg Company stock is trading at 68.76.

Summary of Strategy

Buy: breakout at 69 after confirming volume requirement of 11.5 million shares in the daily chart.

Target: 80

Stop: A close below 65 negates this trade call.

KSS – Kohl’s Corporation

Kohl’s Corporation is a department retail chain that’s been operating since 1927. The company opened its first store in Milwaukee. 90 years later, the company managed to put up 1,155 stores all over the United States.

KSS has been bearish since it created a triple top at 79 in April 2015. This resistance level has never been breached since May 2002. As investors dumped their shares, the value of the stock plunged. KSS lost 57.45% of its value before it found support at 35 in May 2016. The stock has never closed below that level since.

Technical analysis show that KSS generated a bullish reversal structure that relies on breach of resistance at 57.5. To confirm the breakout, bulls must come up with volume of 20 million on the daily chart. Buyers who bought at the bounce on November 9, 2017 at 40 are likely to sell their positions at this resistance level. The stock requires a fresh batch of investors to hold their shares and sell them at a higher price.

The strategy is to buy breakout at 57.5 with volume of 20 million shares on the daily chart. Take out 57.5, and we have a target of 79.

Weekly KSS Chart

Monthly KSS Chart

As of the time of writing the Kohl’s Corporation stock is trading at at 56.00.

Summary of Strategy

Buy: breakout at 57.5 with 20 million volume in the daily chart

Target: 79

Stop: A close below 50 invalidates 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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