9 Charts to Watch for Potential Breakouts

by Daniel Putnam | September 18, 2012 12:48 pm

9 Charts to Watch for Potential Breakouts

The markets’ rise to new highs has brought a number of individual stocks along for the ride, but plenty of names still haven’t yet made a move above their previous 52-week highs.

Nine, in particular, stand out as having the potential to put up some decent returns in the next few weeks — if the broader market can keep rising.

This isn’t an across-the-board prediction that all of these stocks will break out, but instead an overview of companies that investors should put on their watch list.

Energy usually is home to an abundance of interesting charts, and that’s indeed the case right now. In the past month, both Exxon Mobil (NYSE:XOM[1]) and Chevron (NYSE:CVX[2]) finally broke out to new highs after flirting with resistance for more than a year.

However, Royal Dutch Shell (NYSE:RDS.A[3]) still hasn’t been able to make the move above its 52-week high at $74.52, even as its peers in the oil-majors group have done so with authority. While a pullback wouldn’t be surprising given RDS.A’s recent run, this one warrants a look as a source of beta if crude oil continues to post gains in the weeks ahead.

rdsa1 300x173 9 Charts to Watch for Potential Breakouts
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The charts of two smaller energy companies — EOG Resources (NYSE:EOG[4]) and Oil States International (NYSE:OIS[5]) — also stand out for their interesting formations. Both recently rose right to their previous highs ($119.97 and $87.65, respectively) in the post-QE3 rally, and they have since pulled back amid this week’s profit-taking. But like RDS.A, both are positioned for a move to new highs if the broader sector holds up.

eog 300x173 9 Charts to Watch for Potential Breakouts
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ois 300x173 9 Charts to Watch for Potential Breakouts
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Also in energy, the equipment producer Dresser-Rand Group (NYSE:DRC[6]) has rallied in recent months, but unlike EOG and OIS it moved briefly to a new high last week before pulling back. The stock is in the midst of retesting its previous resistance at $55, and with a forward P/E of 14, there’s room for DRC to move up from here.

drc 300x173 9 Charts to Watch for Potential Breakouts
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The industrials sector also is home to two stocks that are right at resistance: Danaher (NYSE:DHR[7]) and Honeywell (NYSE:HON[8]). The two-year charts show that this is the third time the stocks have hit these levels, but this time their P/E’s are lower than on either of the previous two occasions.

Also working in Honeywell’s favor is that a number of its large-cap defense industry peers — Lockheed Martin (NYSE:LMT[9]), Raytheon (NYSE:RTN[10]), Northrop Grumman (NYSE:NOC[11]) and L-3 Communications (NYSE:LLL[12]) — have all moved to new 52-week highs this year. RTN and NOC are both sitting just short of two-year highs.

hon 300x173 9 Charts to Watch for Potential Breakouts
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dhr 300x173 9 Charts to Watch for Potential Breakouts
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Outside of energy and industrials, three stocks to watch are Limited Brands (NYSE:LTD[13]), DISH Network (NASDAQ:DISH[14]), and Akamai Technologies (NASDAQ:AKAM[15]). On Monday, the closing levels and 52-week highs for these stocks were:

LTD: $50.23/$51.84
DISH: $32.01/$35.64 (although $34 is a more accurate breakout point)
AKAM: $38.84/$39.67

A word of warning here: Any move in this group could prove short-lived, as all three stocks are trading at their highest valuations of the past year.

ltd 300x173 9 Charts to Watch for Potential Breakouts
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dish 300x173 9 Charts to Watch for Potential Breakouts
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akam 300x173 9 Charts to Watch for Potential Breakouts
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Playing for a breakout in these stocks is no lay-up, as all have performed well of late and might be due for a breather. Still, those with a inclination toward technical analysis might find this list to be fertile ground for some quick returns as autumn progresses.

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

Endnotes:
  1. XOM: http://studio-5.financialcontent.com/investplace/quote?Symbol=XOM
  2. CVX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVX
  3. RDS.A: http://studio-5.financialcontent.com/investplace/quote?Symbol=RDS.A
  4. EOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=EOG
  5. OIS: http://studio-5.financialcontent.com/investplace/quote?Symbol=OIS
  6. DRC: http://studio-5.financialcontent.com/investplace/quote?Symbol=DRC
  7. DHR: http://studio-5.financialcontent.com/investplace/quote?Symbol=DHR
  8. HON: http://studio-5.financialcontent.com/investplace/quote?Symbol=HON
  9. LMT: http://studio-5.financialcontent.com/investplace/quote?Symbol=LMT
  10. RTN: http://studio-5.financialcontent.com/investplace/quote?Symbol=RTN
  11. NOC: http://studio-5.financialcontent.com/investplace/quote?Symbol=NOC
  12. LLL: http://studio-5.financialcontent.com/investplace/quote?Symbol=LLL
  13. LTD: http://studio-5.financialcontent.com/investplace/quote?Symbol=LTD
  14. DISH: http://studio-5.financialcontent.com/investplace/quote?Symbol=DISH
  15. AKAM: http://studio-5.financialcontent.com/investplace/quote?Symbol=AKAM

Source URL: http://investorplace.com/2012/09/9-charts-to-watch-for-potential-breakouts-ltd-hon-rdsa-dish-akam-eog-ois-drc-dhr/
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