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- The past few weeks have shown us just how sensitive this market is to the news, especially concerning the ongoing European financial saga.
It is time to be very cautious, to prune laggards from your portfolios, raise cash, and hold only quality stocks that will benefit most from the economic recovery. To help you with that, I’ve put together a list of top socks to buy for May.
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Top Stock #1: EMC Corp. (EMC)
EMC Corp. (EMC) is an information storage and peripheral company.
As the economy recovers, demand for information storage and new technologies in that area will rise, and EMC is an industry leader.The stock has recovered from its bear market lows under $10, and in late April drove to new highs above $20. Technically, the triple-top breakout
on solid accumulation was a strong signal to buy this stock. But the market sell-off took the good with the bad and drove this stock to its 200-day moving average where it is a screaming buy.The trading target for EMC is $20, but could be much higher based on the high rate of accumulation and strong momentum. Standard & Poor’s rates
EMC a “four-star buy” with a 12-month target of $22.
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Top Stock #2: JB Hunt Transport Services (JBHT)
JB Hunt Transport Services (JBHT) has made new
highs every quarter for the past year. It is a solid advance with a series of very predictable “ramp-ups,” which blast the stock through double- and
triple-tops at a regular rate. In mid-April, JBHT smashed through another “ramp,” but this time in a much shorter time frame following very heavy
accumulation.The transportation group, of which JB Hunt is a member, is considered a forward indicator for the economy, and the company’s revenues are rapidly
picking up, indicating a better year for this and other transportation companies.Last week’s sell-off drove JBHT to its 200-day moving average and bullish support line, and Friday’s intraday rally resulted in a stochastic buy signal. The trading target for JBHT is $38 but could be much higher if the stock breaks $40 on heavy volume.
S&P rates the stock a “four-star buy” with a 12-month target of $44.
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Top Stock #3: OfficeMax (OMX)
OfficeMax (OMX), a household name with retail stores throughout the
country, is a direct beneficiary of a stronger economy. The company recently reported a rise in net income to $24.8 million, or 29 cents per share,
from $13.1 million, or 17 cents, versus the year-ago period.The stock has been charging ahead making new highs almost monthly since June of last year. On April 29, OMX reversed from its bullish support
line on very high volume and a powerful breakaway gap. This powerful signal is so strong that even a 1,000-point Dow sell-off could not break its bull market trend line.The technical target for OMX is $24, but longer term it could easy reach a full 50%
retracement of its bear market low with a target of $28. OMX is a strong buy now.
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Top Stock #4: Yamana Gold (AUY)
Yamana Gold (AUY), a large-cap Canadian-based miner, engages in the
acquisition, exploration, development and operation of gold properties.The stock has been consolidating following a pullback after making a high at just over $14 last December. Now, with the penetration of the bearish resistance
line in early April, and the increase in volume, just as the stochastic issued a buy signal, it appears that AUY is about to break through a
triple-top and launch a run to around $13.
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Top Stock #5: Lennar Corp. (LEN)
Homebuilder Lennar Corp. (LEN) has risen from under $4 in November
2008, to over $20. But the recent break from $18 and a compound top, followed by very high volume and a breakaway gap, despite the market sell-off, tell us that the chances are
high that Lennar may have only just begun its move higher.The recent price action confirms that the stock has broken from a long-term saucer (not shown) following a fall from the mid-$40s early in 2007.
Longer term, the stock could drive to its prior break zone.For now, the trading target is $21. S&P rates the stock a “five-star strong buy” with a 12-month price target of $25.
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Top Stock #6: Market Vectors Steel (SLX)
The Market Vectors Steel (SLX) seeks to track the price and yield
performance, before fees and expenses, of the NYSE Arca Steel Index (STEEL).
Steel is the backbone of any economic recovery, and this ETF holds a broad portfolio of domestic and international manufacturers that could benefit
from a worldwide economic expansion.Note the strong Collins-Bollinger Reversal (CBR) buy signals, which in the past have been very timely. Also note the enormous increase in accumulation and a stochastic buy signal.
SLX could be viewed as a core holding and long-term portfolio purchase.The trading target for SLX is $75 by the end of May.
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