by Daniel Putnam | April 26, 2012 1:45 pm
The beauty of technical analysis is that no matter what the broader market is doing, there always is an opportunity somewhere — you just have to look for it. Right now, 10 stocks have formed interesting chart formations. This discussion isn’t intended to predict breakouts for all of the names on the list, but rather to alert traders to potential opportunities to watch in the days and weeks ahead.
First up is gold, as represented by the SPDR Gold Trust ETF (NYSE:GLD). Gold has formed into a “symmetrical triangle” and now is close to its lower trendline after trading under its 200-day moving average. The symmetrical triangle isn’t always the most reliable pattern, especially as the stock moves toward the apex, but the lower trendline is four years old and therefore is a potentially important signal — especially for anyone trying to pick a bottom in gold stocks.
Another interesting name to watch is Baltic Trading (NYSE:BALT), a dry bulk shipper whose focus on the spot market makes it an effective trading proxy for the Baltic Dry Index. The stock has moved above two upper trendlines after finding support around $4, and it looks set to move above its 200-day moving average. If you’re a believer in the global growth story, BALT might be a source of some upside beta through the summer.
The agriculture sector always is an interesting area to search for trading opportunities, and right now two stocks in particular stand out. Both CF Industries (NYSE:CF), a fertilizer producer, and Syngenta (NYSE:SYT), which develops seeds and herbicides, are on the cusp of breaking out to new high ground. Keep an eye on these as a possible guide as to whether other important ag names — including Mosaic (NYSE:MOS), Intrepid Potash (NYSE:IPI) and Potash of Saskatchewan (NYSE:POT) — are putting in a bottom here.
The industrials sector also has its share of interesting charts. Both Honeywell (NYSE:HON) and Danaher (NYSE:DHR) have tried and failed to take out previous 52-week highs, and are now in the process of staging a second attempt. The key levels are $62 for Honeywell and $56 for Danaher — watch these to see if the stocks can break out to new highs or if they’re about to run out of gas. Honeywell is on the high end of its historical valuation range, so be alert for the possibility of a false breakout.
Precision Castparts (NYSE:PCP), a manufacturer of airplane components, has formed a bullish rising wedge pattern and is close to breaking past its 52-week high of $179.47. The company reports earnings May 17.
Two conservative stocks also have formed into interesting formations: H.J. Heinz (NYSE:HNZ) and the drug distribution company AmerisourceBergen (NYSE:ABC). Like PCP, Heinz is in a rising wedge. At the same time, however, it recently violated its lower trendline and it is trading near the upper end of its historical P/E range. The stock is unlikely to experience massive downside because of its high dividend and steady nature, but those who are long should keep an eye on this lower trendline. Amerisource, meanwhile, has formed a symmetrical triangle that could resolve in either direction. But like Heinz, the stock recently violated a lower trendline, so this too should be monitored for signs of further weakness.
Rounding out the list is Carnival Cruise Lines (NYSE:CCL). The stock has traded sideways through a broad range since last year’s disaster, but it seems to have found support in the high 20s. At the same time, it has taken out its upper trendline and is on the verge of moving above its 200-day. Based on this chart, CCL could be in line for some decent upside in a benign-to-positive tape.
As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.
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