Technical analysis and stock charts get a bad rap by many old-school investors. After all, companies are supposed to go up based on profits and sales — not whatever funny picture it makes on a charting tool.
However, as Warren Buffett quipped in his 1993 Berkshire Hathaway shareholder letter, “In the short-run, the market is a voting machine — reflecting a voter-registration test that requires only money, not intelligence or emotional stability — but in the long-run, the market is a weighing machine.”
If you’re interested in weighty matters like profit margins and EBITDA, then by all means delve into fundamental analysis with a buy-and-hold strategy. The 2009 bear market lows caused by the Great Recession or the brief 2011 dip around the European Debt crisis both provide plenty of evidence that strong long-term investments always bounce back from short-term pressures.
But in this volatile stock market when investors tend to move based on sentiment more than anything else, it’s crucial for anyone with short-term needs to watch how the market is behaving this instant.
Stock charts and technical analysis will help you do that.
If you’re interested in which unknown stocks are trending higher amid investor demand and what big-name stocks could fall apart, here are a few picks with very interesting stock charts as we enter October.
Stock Charts to Watch in October: Plug Power (PLUG)
Plug Power Inc (NASDAQ:PLUG) is an old favorite that many momentum investors will remember from its meteoric run from less than a quarter in early 2013 to more than $8 for a brief moment in early 2014.
Well, even though PLUG stock might not be back, Plug Power’s charts show a big change in the short-term momentum of this stock as it has rallied off September lows to about $1.70.
Despite the rally, PLUG stock doesn’t have an overbought Relative Strength Index (RSI) reading, and its short-term 15-day moving average is going to quickly catch up and cross over the 50-day — a potential silver cross that could hint at a leg up again in October now that volume has settled down.
Stock Charts to Watch in October: Gold, Via the SPDR Gold Shares (GLD)
While not a perfect representation of gold prices, the SPDR Gold Shares (NYSEARCA:GLD) exchange-traded fund is a pretty good proxy of retail investors’ demand for gold investments. And after a death cross in early September, we are seeing gold on the verge of a significant breakdown.
Part of that is, of course, rumblings from the Federal Reserve about a potential rate hike before year-end even if it didn’t act at its most recent meeting. But it’s also worth acknowledging that GLD is up 16% in the past 12 months to outperform stocks nicely … and it may be time for investors to move elsewhere.
Watch GLD carefully to see whether gold is in for more pain across the coming months.
Stock Charts to Watch in October: Match Group (MTCH)
Tinder parent Match Group Inc (NASDAQ:MTCH) has been steadily marching higher, doubling since its 52-week low in February. And while momentum seemed to be slowing, in September we saw another nice gap up for MTCH stock that could be a sign it is heating up again in the weeks leading up to its next earnings report.
While the relative strength reading is hinting that Match Group is overbought, that could resolve itself with another leg higher now that shares have pushed higher on reasonably high volume to set a new 52-week high.
Of course, a big leg down could mean a long race down to new lows … so tread lightly.
Stock Charts to Watch in October: Extended Stay America (STAY)
Hotel operator Extended Stay America Inc (NYSE:STAY) isn’t exactly known as a barn-burner. However, look at a STAY stock chart since spring and you’ll see a whole lot of peaks and valleys as the company tries to find its way.
While trading in a narrower range the last several weeks, a series of higher lows has made for an improving picture that hints at a pending breakout higher.
The 200-day and 50-day MAs are right on top of each other. But one more spike on higher volume like we saw in mid-September could power some big short-term gains.
Stock Charts to Watch in October: Twitter (TWTR)
Twitter Inc (NYSE:TWTR) gapped up on buyout rumors, but in the absence of a real deal, things could get very ugly. The RSI indicator on Twitter’s stock charts hints that it is now overbought, and maintaining the $23 mark is going to get increasingly difficult once the longer-term price trends catch up with the shorter-term 15-day moving average.
Either the news is validated via a firm acquisition offer … or you’ll want to pay close attention to TWTR’s chart for more downside targets.
Just consider the fact that short sellers are piling back in as proof.
Stock Charts to Watch in October: Ziopharm Oncology (ZIOP)
Development-stage biotech stocks are inherently fast-moving investments, so it’s no surprise that charts matter a great deal to a pick like Ziopharm Oncology Inc. (NASDAQ:ZIOP).
Shares are down about 60% from their 52-week high; however, they’ve rallied nicely off recent lows, and in September we saw the 15-day moving average once again break through the medium-term 50-day average.
A look at ZIOP’s stock charts shows a middle-of-the-road RSI and a Moving Average Convergence Divergence (MACD) reading that has been trying hard to stay above the signal line for the last few weeks. Thus, Ziopharm could be on the verge of a breakout.
Stock Charts to Watch in October: Kirby Corporation (KEX)
Kirby Corporation (NYSE:KEX) is a mid-cap shipper that doesn’t get much attention. However, it has been rallying nicely after bottoming out in August. A golden cross a few weeks back coupled with favorable news about a favorable settlement relating to a 2014 oil spill has sparked optimism in the few investors who follow this pick.
The turnaround could continue in earnest if momentum keeps pushing to the upside, and if KEX gets back to its previous highs of $73 a share, you’ll be sitting on a quick 25% gain in this pick.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.