Five US stocks to watch from consumer, technology, healthcare and energy sector of the US stock market were left since I posted recommended US stocks for position trading. While the stock watch list included 4 stocks of the financial sector, technical analysis at 5 other stock charts suggests position trading might become profitable in the long run. Most of these stocks experienced double-digit gains during yesterday’s big boost in financial markets, as central banks announced support in the economic crisis. Still, buying stocks when they are trading close to respectable support levels always sounds like a good stock trading strategy.
MDR: McDermott International Inc of the Energy sector focuses on designing offshore oil and gas projects worldwide. The McDermott’s shares almost touched zero value in the start of the century but a huge 4-year uptrend between 2004 and 2008 pushed the MDR stock price to $35 before an even more sudden pullback forced shares’ value below $5 in the last 5 months of 2008! The support level of 10 dollars per share has been tested extensively since 2009 and the October’s candlestick indicates buyers controlled the market before sellers stepped in, as the longer upper shadow implies. Nothing prevents the MDR stock price to hit previous years’ highs, but also to retest the support level. Should the support level give way, traders must be ready to minimize their losses.
SAI: SAIC Inc shares value has been dropping in the last couple of months. The frightening downtrend let the SAI stock price fall from $17.50 to the low of $11, giving enough room though for a pullback. Traders entering long must set a stop loss right below the support level at $11. They can set a profit target at $15 for trading out and should be alert to exit the trade at the first negative signal, due to entering long in a downtrend looking to profit from a pullback.
CRL: The third stock pick is the only stock from the healthcare sector of the US stock market. Charles River Laboratories International Inc provides solutions that accelerate the drug discovery and development process. CRL stock performed the worst in 2008. CRL shares lost more than half of their value during that time. Nowadays they are trading at a crucial support level, which was tested last year.
The two remaining stock picks come from the technology and consumer sectors. First, AMAT stock may not look promising, since the Applied Materials Inc shares have been trading for $10-15 per share for 3 years! Additionally the technology stock has not exceeded the high of $30 for more than 10 years now! Given these facts it’s hard for someone to give investment advice on AMAT stock. However, the support level at $10 has been proven trustworthy over the past months. The monthly chart doesn’t allow setting profit targets way up though, damaging the reward-risk ratio.
Finally, the Kellogg Company stock is the last stock I picked according to my custom indicator. I consider K stock trading a bit risky, since the stock has trouble going higher than the 10-year high, which has been tested 3 times or so the last 4 years. Obviously if the resistance level is broken, traders who are long will certainly welcome the boost. Until then, setting a tight stop loss below the support level of $48 will keep the risk manageable. Trading out part of the position at the high will secure some profits, in case K stock once again fails to overcome the resistance.
Disclaimer: I’m long CRL, SAI, MDR, K, AMAT as of today.