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Trade Recommendation: Ride ETN and EW on Breakout

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The S&P 500 Index (SPX) flexed its muscles on Friday, December 8, as it gapped up, opening nearly 10 points higher than its previous close. With volume going below its 20-day average, the market’s telling us that sellers are running out of ammunition. The slowdown in selling has enabled bulls to push the index up, closing almost the same level as the day’s high.

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The price action on December 8 affirms our bullish view. With that sentiment, let’s continue trading stocks that are on the verge of breaking out.

ETN – Eaton Corporation

The stock has suffered as much as a 42.25% loss in value during the course of its 3-year downtrend. It almost touched a high of 80 back in 2014, but bears claimed that level and sent the stock to as low as 46.19 in 2016. Fortunately for the bulls, the stock respected that support and used it to generate one higher low after another. The consecutive rallies has given ETN momentum to beach resistance at 80, albeit briefly.

While the bears continue to own that resistance level, technical analysis reveals that it’s only a matter of time before bulls conquer that level with conviction. Weekly and monthly charts reveal a large bullish reversal pattern that can take ETN to a new five-year high. Breach 80 with heavy volume of 11 million in the daily chart should attract momentum traders and give the stock a clear path to our target of 120. More importantly, breakout of this three-year resistance level should restart the uptrend for ETN.

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Weekly ETN Chart

Monthly ETN Chart

Summary of Strategy

Buy: breach of 80 with volume of 11 million

Support: 76 and 72

Target: 120

Stop: A close below 72 negates this trade call.

EW – Edwards LifeSciences Corporation

While EW technically remains in an uptrend, it suffered as much as a 33.37% loss in value as it went through a massive corrective phase. It went as high as 121.75 in late 2016 before getting sent back by bears to as low as 81.12 in under two months. Just like ETN, however, EW used that support level to rally and post a series of higher lows. Currently, the stock is threatening to finally breach resistance at 120.

Technical analysis reveals a large bullish continuation pattern that can signal the end of EW’s corrective phase. In addition, indicators show that bulls are in a good position to take out 120. The last candlestick on the weekly chart is a hammer which indicates the presence of buyers above 110. In addition, RSI shows that the stock is far from oversold territory, giving it room to make a move up. Lastly, volume has picked up which hints that a significant number of market participants are showing interest in the stock.

The strategy is to wait for the chart to break resistance at 120 with over 9 million in volume in the daily chart. Breach of this level will attract momentum traders and may lift the stock to our target of 160. It is also important to note that there is no known resistance above 120. Hence, the stock may reach our target without much of a struggle.

Weekly EW Chart

Monthly EW Chart

Summary of Strategy

Buy: breach of 120 with volume of 9 million

Support: 112 and 110

Target: 160

Stop: A close below 10 invalidates this trade view.

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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3.6 stars on average, based on 149 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: Fluor Corporation and F5 Networks Incorporated

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The S&P 500 (SPX) showed indecision yesterday, April 23, as it moved as high as 2,682.86 but closed the day at 2,670.29. If the index once again revisits 2,600, the support may no longer hold. Stay defensive and only invest in stocks that have strong bullish sentiments like the names that we have below.

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FLR – Fluor Corporation

Fluor Corporation (FLR) is a multinational Fortune 500 publicly-traded engineering, procurement, fabrication, construction (EPFC) and maintenance company founded in 1912. It provides engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, and project management services in the following segments: Energy, Chemicals & Mining; Industrial, Infrastructure & Power; Government, and Maintenance, Modification & Asset Integrity (MMAI). The company’s subsidiaries include American Equipment Company, Inc., Otay River Constructions, and ADP Marshall, Inc., among others.

Technical analysis show that FLR has taken out resistance of 60 on April 23, 2018. The price action triggered the large inverse head and shoulders pattern on the weekly chart. The breakout was validated by heavy volume as volume rose by over 107% yesterday. In addition, the RSI is not yet in overbought territory. Expect the stock to follow through in today’s trading to further validate the trend reversal.  

Furthermore, fundamental analysis show that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of FLR is 45.21. While the PE ratio tells us that the stock is already expensive, its five-year maximum of 58.92 shows that it has some more room for growth.

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The strategy is to buy as close to 60 as possible. If bulls continue to hold this level, they may create a base and move to our target of 80. The process may take more than a year.

Weekly FLR Chart

Monthly FLR Chart

As of this writing, the Fluor Corporation stock is trading at 61.48.

Summary of Strategy

Buy: As close to 60 as possible.

Target: 80

Stop: 54

FFIV – F5 Networks Incorporated

F5 Networks Incorporated is an American company that develops, markets, and sells application delivery networking (ADN) for the security, performance, availability of servers, data storage devices, and other network and cloud resources. It offers products based on its Traffic Management Operating System (TMOS) and Access Policy Manager (APM). The company operates primarily in the United States but also in Europe, the Middle East, Africa (EMEA), Japan, and the Asia Pacific region (APAC). F5 Networks was incorporated in 1996.

Technical analysis show that FFIV has taken out 149 resistance on April 13, 2018 and triggered the large cup and handle pattern on the daily chart. The price action was validated by extremely heavy volume and a follow through that saw the stock go as high as 161.58 on April 17. At this point, however, FFIV was already flashing overbought signals. It needs to correct and create a new base to keep its ascent sustainable. That’s where you can come in.

In addition, fundamental analysis show that FFIV’s trailing twelve months (TTM) PE ratio stands at 24.34. It may look like the stock is already fairly valued but it’s five-year maximum of 33.68 indicates that investors believe in the company’s potential for growth.

The strategy is to wait for the dip and buy as close to 149 as possible. As long as FFIV is above 149, it has enough bullish momentum to reach 183.

The process may take more than a year.

Daily FFIV Chart

Weekly FFIV Chart

As of this writing, the F5 Networks Incorporated stock is trading 157.72.

Summary of Strategy

Buy: As close to 149 as possible.

Target: 183

Stop: close below 140.

 

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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3.6 stars on average, based on 149 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: General Motors and Everest RE Group

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The S&P 500 (SPX) appears to have filled the gap between 2,695.68 and 2,709.79 on the daily chart as the index went as high as 2,717.49 on April 18. However, it seems that SPX has generated another lower high. Unless the index can move above 2,720 soon, it is in danger of creating a bearish descending triangle pattern.

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With the SPX showing signs of weakness, let’s look at stocks that are near firm support levels.

GM – General Motors Company

General Motors Company (GM) is an American multinational corporation that designs, builds, and sells cars, trucks, crossovers, and automobile parts. Founded in 1908, it now has 180,000 employees across 35 countries worldwide. The company’s operational segments include GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO), GM South America (GMSA) and General Motors Financial Company, Inc. (GM Financial). In General Motors’ portfolio are the brands Buick, Cadillac, Chevrolet, GMC, Holden, and Wuling.

Technical analysis show that GM has taken out resistance of 37 on September 8, 2017 and triggered the inverse head and shoulders reversal pattern on the weekly chart. The stock went as high as 46.76 on October 24, 2017 and hit the target of the pattern before it retreated and dipped to 34.50 on March 27, 2018.

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The stock, however, has recently reclaimed 37. As long as that level holds, the large cup and handle pattern on the weekly chart is still in play.

In addition, fundamental analysis show that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of GM is 21.35. While the PE ratio looks as if the stock is already fairly valued, its five-year maximum shows that it has still room to grow. GM’s maximum TTM PE ratio in the last five years was 32.18. Based on this number, we can say that GM has some more upside potential.

The strategy is to buy as close to 37 as possible. If bulls continue to hold this level, they may create a base and crawl to our target of 54. The process may take more than a year.

Weekly GM Chart

Monthly GM Chart

As of this writing, the General Motors Company stock is trading at 37.61.

Summary of Strategy

Buy: As close to 37 as possible.

Target: 54

Stop: 34.50

RE – Everest RE Group Limited

Everest Re Group (RE) is a company engaged in insurance and reinsurance underwriting. Founded in 1973, its products now range from property and casualty reinsurance to marine, aviation, surety, errors and omissions liability (E&O), directors’ and officers’ liability (D&O), medical malpractice, accident and health (A&H), and workers’ compensation insurance.

Technical analysis show that RE bottomed out in December 2017 when it dropped to 208.81. The stock has been rallying since and has even managed to go as high as 264.88 on March 21, 2018. Bears repelled the advance, but the stock appears to be carving a bullish higher low setup above 240. If this level holds, RE may use it to take out 265 resistance.

Moreover, fundamental analysis show that RE’s trailing twelve months (TTM) PE ratio stands at 22.13. This looks like a reasonable PE ratio but it’s five-year maximum of 38.36 indicates that investors are willing to pay a premium. In other words, RE has some more potential for growth.

The strategy is to buy at current market level. If the stock holds the higher low of 241.80, bulls will likely use it to create a base and breach 265 resistance. Once breakout is complete, the stock may march to our target of 320.

The process may take more than a year.

Daily RE Chart

Weekly RE Chart

As of this writing, the Everest RE Group Limited stock is trading 246.99.

Summary of Strategy

Buy: At current market price of 246.99.

Target: 320

Stop: 241.80

 

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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3.6 stars on average, based on 149 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: Essex Property Trust Incorporated and Edison International

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The S&P 500 (SPX) resumed its climb yesterday, April 16, 2018, as it closed at 2,677.84. The price action encourages those who bought around 2,600 to keep holding their positions. This helps ease selling pressure, which may help bulls continue their ascent to the top end of the range at 2,800.

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As the index shows signs of life, let’s look at stocks that are about to breakout.  

ESS – Essex Property Trust Incorporated

Essex Property Trust (ESS) is a publicly-traded real estate investment trust (REIT) company that acquires, develops, redevelops, and manages apartment communities. Founded in 1971, what started from 16 multifamily communities has now grown to 59,645 homes in 250 communities. The company operational segments include Southern California, Northern California, and Seattle Metro.

Technical analysis show that ESS is primed to take out resistance of 244 and trigger the large inverse head and shoulders pattern on the daily chart. To breach the resistance, the stock must print volume of at least 1 million shares on the daily chart. Bottom pickers are likely to dump positions at the resistance. ESS needs breakout buyers to come out and overwhelm sellers.

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In addition, fundamental analysis show that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of ESS is 37.33. While the PE ratio looks high, it is still way below the stock’s five-year average of 54.99. Based on these figures, we can say that ESS has some more room to grow.

The strategy is to buy the breakout at 244 after the stock generates volume of 1 million shares. If bulls take out 244, they will gather enough momentum to sustain a climb to our target of 268. The process may take six months.

Daily ESS Chart

Weekly ESS Chart

As of this writing, the Essex Property Trust Incorporated stock is trading at 245.30.

Summary of Strategy

Buy: Breakout at 244 as long as the stock prints over 1 million in volume on the daily chart.

Target: 268

Stop: Close below 240 after the breakout.

EIX – Edison International

Edison International (EIX) is a public utility holding company. Founded in 1886, it is the parent company of Southern California Edison Company (SCE) and Edison Energy Group Incorporated (Edison Energy Group). SCE supplies and delivers electricity to Southern California, while Edison Energy Group is a holding company for subsidiaries focused on finding business opportunities across energy services.

Technical analysis show that EIX is poised to take out resistance of 65 and trigger an inverse head and shoulders reversal pattern on the daily chart. This comes after the stock generated a higher low of 61.47 on March 26, 2018.

To complete the breakout, bulls must generate volume of at least six million shares on the daily chart. Those who bought the bottom and those who bought the higher low are likely to take profits at the resistance. The market needs buyers to absorb the selling pressure.

Moreover, fundamental analysis show that EIX’s trailing twelve months (TTM) PE ratio stands at 38. This looks like a high PE ratio but it is still low in relation to its five-year PE ratio range which is 10.57 – 225.55. With such a wide range, EIX has a lot of upside potential.

The strategy is to buy the breakout at 65 as long as the volume requirement is met. If bulls complete the breakout, they will gather enough momentum to push EIX to our target of 72. The process may take more than a month.

Daily EIX Chart

Weekly EIX Chart

As of this writing, the Edison International stock is trading 64.64.

Summary of Strategy

Buy: Breakout at 65 as long as the stock prints over 6 million in volume on the daily chart.

Target: 72

Stop: Close below 63 after the breakout.

 

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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Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
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3.6 stars on average, based on 149 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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