Top Charts to Watch in the First Quarter

by Daniel Putnam | December 28, 2011 8:00 am

Top Charts to Watch in the First Quarter

One result of the recent market action is the general lack of interesting charts among individual stocks, with the majority mired under their 200-day moving average in the bottom half of their 52-week trading range. Nevertheless, a little digging will reveal that there are still a number of opportunities in stocks that are within striking distance of their 52-week highs and that have the potential to break over to the upside and outperform if the market strengthens in the months ahead.

Below is a select list of 19 stocks to put on your watch list for the first quarter. These stocks are all near their 52-week highs, with a focus on those that have been moving sideways after several attempts at a breakout. At the same time, it screens out those that have risen near their high-water marks by virtue of a strong rally of 20% or more in the past month, which raises the risk of a false breakout and subsequent reversal.

The consumer, technology, and energy sectors are the most fertile ground for stocks that meet these criteria. Of the 19 stocks listed below, all closed Friday at or above their 200-day moving averages with the exception of Priceline.com (NASDAQ:PCLN[1]).

The caveat: This isn’t a blanket buy recommendation on these companies but rather a starting point for those inclined toward technical analysis.

Consumer

Company Ticker Friday
Close
52-Week
High
Change Notes
Chipotle CMG $335.32 $347.94 3.8% Four failures at $340-$350
P/E is 52 trailing,
39 forward.
AutoNation AN $37.12 $41.55 11.9% Caution: 200-day in
jeopardy of rolling over.
Jos. A. Bank JOSB $49.89 $57.14 14.5% Steady fundamentals,
plus 20% short interest
as of 11/30
Aaron’s AAN $27.14 $29.34 8.1% Last breakout in February
2011 brought 40% gain in
2+ months
Foot Locker FL $23.70 $25.50 7.6% 2.8% yield, P/E near a 2.5-
year low, estimates rising
Las Vegas Sands LVS $43.54 $51.05 17.2% Valuation moderating, but
risk is always high with LVS
Priceline.com PLCN $481.73 $561.88 16.6% P/E from 39 to 25 in ’11,
but risk of breakdown
below $450
J.M. Smucker SJM $78.80 $80.26 1.9% Caution: P/E at highest
level since 2007
Hormel Foods HRL $29.47 $30.50 3.5% Major upside likely, but
steady Eddie with a
2% yield


zChart13 Top Charts to Watch in the First Quarter

zChart23 Top Charts to Watch in the First Quarter

Technology

company ticker Friday
Close
52-week
high
change notes
Google GOOG $633.14 $642.96 1.6% Perched at two-year
resistance, near
all-time low
ARM Holdings ARMH $27.10 $32.18 18.7% Breakdown risk in
this chart; monitor
carefully
Taiwan Semi TSM $12.92 $14.05 8.7% Last breakout
(December ’10)
brought 22% rally
in next two months
Qualcomm QCOM $54.63 $59.84 9.5% Last breakout at
start of 2011,
20% rally in next
two months
Sandisk SNDK $50.52 $53.60 6.1% Single-digit fwd P/E;
Micron reported
healthy flash sales
Intuit INTU $53.10 $56.46 6.3% Caution: possible
double top, near
four-year high P/E
Rackspace RAX $43.31 $46.50 7.4% Caution: possible
double top, P/E is
92 trailing 54 fwd

zChart33 Top Charts to Watch in the First Quarter

zChart43 Top Charts to Watch in the First Quarter

Energy

company ticker friday
close
52-week
high
change notes
Royal Dutch Shell RDS.A $73.11 $77.06 5.4% 4.6% yield,
12 P/E;
should be a
top performer
if oil rallies in ’12
Noble Energy NBL $95.38 $101.27 6.2% Above-average
growth, $116
consensus target
Anadarko Petroleum APC $76.67 $85.50 11.5% Good discoveries,
but litigation
overhang. Three
fails at $85 in ’11

zChart53 Top Charts to Watch in the First Quarter

zChart63 Top Charts to Watch in the First Quarter

As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.

Endnotes:
  1. PCLN: http://studio-5.financialcontent.com/investplace/quote?Symbol=PCLN

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