Many people like to come out with predictions for the year ahead, I am not interested in doing so. I am not a ‘guesser’, I do not use the news as a reason to act, I do not come up with arbitrary numbers and call them ‘targets’. This is what I do;
In the most simple form, I look at trends and prior stock price movements to determine the future potential of the particular stock. I look for patterns that form within the charts (such as bull flags, triangles, etc), then consider the pattern within the context of the overall trend of the given entity.
Keep this in mind as I comment on the following stocks and ETFs, I am interested in the company’s balance sheet, P/E ratio(s), debt, or anything unrelated to the prior price fluctuations. This is simply my process, does not mean it is ‘right’ and doesn’t mean yours is ‘wrong’, it is just what I choose to implement.
Over the past year my technical analysis has involved greatly. The charts I examine are much simpler and cleaner. The reason behind is that over the past year I have come to the realization that trading/investing does not need to be complex, it needs to be consistent. As a result, unlike last year’s ‘2013 Investments’, these will not have ‘price targets’ on them, they will however have stop losses accompanying them as I am not interested in staying wrong when trading.
The following charts are in no particular order and do represent the ‘quality’ of set up at hand. All of these set ups have been hand selected form several hundred stocks and just because a particular stock that you follow did not make the list, does not mean it is a bad investment.
The 2014 Investments are:
$C, $APOL, $CAT, $CBG, $CMC, $CPLP, $CX, $DE, $GPRE, $HT, $HUBG, $NUE & $ORCL (no particular order)
$C – Citigroup
$C has a member of last years 2013 Investments and it was a very good performer of the lot. It did make the list for this year as well based on it’s monthly chart seen below. $C has essentially done nothing for many years and simply consolidated sideways, through this base a lot of power has been built up and if it is able to breakout, it could be explosive. over $55.80 it gets motion and our stop on this trade will be a monthly close below $45.00. The first major area of resistance is near $135 a share.
$APOL – Apollo Group
$APOL is an education stock that has been beaten down for the past few years, thus greatly lagging the overall indices. However, a couple months ago $APOL broke above $21.50, a long term resistance level of the past couple of years. It has a nice base from the lower level consolidation and appears poised to run. The stop loss on this ‘investment’ will be a close below the bottom black line on the chart below ($21.35) on a weekly basis. The first real level of strong resistance lies at around $36.43, an area of interest for this trade.
$CAT – Caterpillar
$CAT has been a major laggard this past year, which was a major disappointment for many, including myself as the 2013 Investment list had it’s counterpart, Deere, on it. The chart has consolidated well over the past few years (monthly chart below) while also holding the breakout level of $80.77. It looks poised to breakout after checking back to the breakout level recently. The stop loss line will be a monthly close below $80.77 and the first level of resistance/interest is right around $115, or the prior all-time highs.
$CBG – CBRE Group
$CBG is one of these stocks that I truly don’t know much about other than it right in front of me on the chart below, which is alright for me. I personally do not want to know alot about the company as that could taint my technical analysis of the stock. The monthly chart (below) has gone sideways for about a decade now and as a result, a very long base has formed, ‘the longer the base, the higher in space’ as ‘they’ like to say. The past few months it has tightened up even more, which adds to the excitement of the eventual breakout. A tight range usually and eventually leads to an explosive move, ‘periods of contraction lead to expansion’. The stop loss line on this 2014 investment/trade is a monthly close back below $21.00, the first area of resistance/interest is prior all-time highs near $38.60.
Commercial Metals Company – $CMC
$CMC is company that I haven’t got a clue what exactly they sell or do, but like $CBG, I know their chart. Below is a monthly chart and ever since 2009 this particular stock has done little to nothing, until recently.Recently, $CMC broke above a resistance level of $17.00 which has proven to be a level of importance for this stock dating back to 2005 at the earliest. I really like this base it has formed but I do not like how it has been up 4 months in a row heading into 2014, not the best entry at this point. With this in mind, a check back to the breakout level of $17.00 is likely, making the logical stop loss line on a monthly basis a close back below $14.00.
$CPLP – Capital Product Partners
$CPLP has a beautiful looking monthly chart and very long base. For the past few months it has consolidated (held higher) over the 21 day moving (average of price) nicely, thus creating a tight range to breakout from. It is ‘poking it’s head out’ now above the breakout line of $9.74, it will be key for this price level to hold into year end. The first level of interest for this stock as it breakouts from this long-term base is around $16.50 a share. The stop loss for this investment will be a monthly close back below $8.00.
$CX – Cemex
$CX had a great first few year after it’s IPO in 2000 but since then it has cooled off and pulled back below the IPO price. For the past years it has been consolidating in a lower level base, allowing for institutions to accumulate shares (what usually happens within bases). In the past few months it has rallied off the lows and begun to consolidate in a bull flag for most of this past year, ahead of the breakout level of $12.00. Over $12.00 this stock likely make another run up, but if it fails to breakout above this level and from it’s bull flag (price pattern that has formed the past few months), then it likely simply trickles back into it’s base for a couple more years. The stop loss line for this trade/investment will be a monthly close back below $9.50 a share and the first area of resistance is the $25.50 level.
$DE – Deere Corporation
Well, $DE (Deere) made it back on the list this year as well. If you were unaware, it was also on last year’s 2013 investment list though it was one of the worst performing stocks from the list, only going up 2.45% for the year. However, with that aside, with another year of consolidation under it’s belt it may just be ready in 2014 to bust out to new all-time highs. The reasoning behind this is, like many of the other stocks that made this list, it has a very long and large base with usually signifies institutional accumulation (a good, ‘bullish’ event).The stop loss for this investment, seen on the chart below, will be a monthly close below $80.00 and the first area of interest/resistance is the ‘one hundred roll’, likely will surpass this mark in 2014 if set up confirms.
Green Plains Renewable Energy – $GPRE
I do not know much about the fundamentals of this company either, but I do like the name they have chosen for some reason. As seen on the monthly chart below, it did not have a very encouraging first couple of years (from 2006-2009), but since then it has managed to put in a nice long base which has recently begun to breakout from ($17.50). The combination of the long term base, a sound volume pattern and price breaking out, it has the ingredients to make a nice run in 2014. The stop loss will be a monthly close $13.00, the first area of resistance is near $28.00.
$HT – Hersha Hospitality Trust
$HT does not have my FAVORITE pattern, not even close. But it still made the 2014 investment list because of the very small amount of risk associated with this potential trade. The stop loss line will be a monthly close below $5.10 and if price is able to close, on a monthly basis, over $6.50 this set up becomes much more attractive.
Hub Group – $HUBG
Unlike $HT, $HUBG has a very compelling looking set up on the monthly charts. After making a huge run from 2003-2008 it has ‘cooled off’ and put in a fear base. To add to this, $HUBG has also been able to bull-flag next to all time highs, a stock that is ‘holding higher’ or ‘bull flagging’ is a stock I want to watch, it shows momentum is in-tact and there is explosive potential. I really like this stock over $42.00, but if it happens to not cooperate then a monthly close below $35.00 will be the exit.
Nucor – $NUE
$NUE is another stock, like $DE whom was on the 2013 investment list that did not perform up to the expected standards. Since then the chart has had even more time to consolidate and recently broken above a very important technical resistance level of $48.90, this is the level that has been controlling the stock for over four years now, as long as this breakout is able to hold there is not a reason to be a long-term bear on this particular stock. The stp loss line will be a monthly close below $44.00, it is a little more risk associated with this ‘trade’, consequently it is not a A+ set up. The first area of resistance is near $72.00.
Oracle – $ORCL
Last, but certainly not least, $ORCL makes the 2014 investment list based on it’s consolidation pattern that has formed the past couple of years that it is now trying to breakout from. The stop loss for this trade will be a monthly close below $30.00, this is to be allow room for the stock to come back into the base and consolidate without us being prematurely stopped out.
Well there we have it, the 2014 investments/trade ideas. I will see you back here in a year to examine how they performed and what share some more ideas for 2015!
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