We’re likely to see investors start to get picky about what they buy and sell now as the S&P 500 hovers in new high territory. For this reason, technical are going to come into play even more heavily.
Two stocks that look to benefit from their charts now are Under Armour Inc (NYSE:UA) and Caterpillar Inc. (NYSE:CAT), while Goldman Sachs Group Inc (NYSE:GS) looks like it may run into resistance.
Caterpillar Inc. (CAT)
Caterpillar shares continue to motor higher as economic data is revealing that the global economy may not be shrinking as many had feared.
The company’s stock is now showing a 19% return year-to-date but is still down 4% for the last twelve months.
The recent bottom in the stock has garnered attention of technicians after successfully testing its 200-day moving average twice in May and June. Now, this important trendline has shifted into an ascending pattern, indicating that the long-term bullish trend is likely to grow in strength.
With the technical trend strengthening, Caterpillar shares are now preparing to break out above the April highs at $80. With almost ten times the stock’s average daily volume outstanding as short positions, the move above $80 could spark a covering rally that would help shares move even higher.
Goldman Sachs Group Inc (GS)
Goldman Sachs has turned into a trader’s dream with its trading range tendencies lately, and it appears ready to give traders an opportunity to either lock in gains or potentially short the stock.
Goldman shares bottomed out in June at the $140 level, also referred to as the Dimon Bottom, and have rallied about 15% since, leading them to a short-term overbought signal from their RSI.
In addition to the overbought reading, Goldman stock is about 2% away from its menacing 200-day moving average. This longer-term trendline has acted as resistance multiple times over the last year and will likely add selling pressure to the stock.
While there is some room overhead for Goldman to move a little higher, the downside risk is beginning to outweigh the upside potential according to the technicals.
Under Armour Inc (UA)
With the Olympics approaching, investors and traders are starting to take more notice of athletic apparel stocks like Under Armor. The interest has rallied shares to a technical hurdle of their own.
As of Thursday, Under Armor shares were trading just below their 200-day moving average for the third day in a row. This is the first time that the stock has tried to break back above this trendline since April, when it made a brief stint of trading above it.
There is a slight technical difference now as the intermediate-term technicals for Under Armor have been improving, indicating a shift in the stock from a bearish to bullish outlook.
The company is set to announce earnings in a few weeks, which may provide the fundamental boost for Under Armor to strengthen its technical picture with a target of $48.
As of this writing, the Johnson Research Group did not hold a position in any of the aforementioned securities.
