Monthly Archives: January 2016

What’s the kind of stocks trading

Typically, September is associated with a return to upside moves. It’s the month you start buying stocks again if you subscribe to the old adage of “sell in May and go away.” That’s not to say that September is historically an outright bullish month for stocks; most statistical studies of stock market seasonality actually show that September is one of the few months that tends to be negative, on average.

 

But in the last 20 years, September performance in the big S&P 500 index has been pretty evenly split between bullish and bearish years. It’s just that, while the up years have been big, the down years tend to be bigger when they do occur.

From a trading perspective, that increased volatility in the stock market spells an opportunity. To take advantage of it this month, we’re turning to the charts for a look at five stocks that are teetering on the edge of breakout territory. Today, we’ll take a closer look at what the price action is saying about them – and when you should buy.

 

First, a quick note on the technical toolbox we’re using here: Technical analysis is a study of the market itself. Since the market is ultimately the only mechanism that determines a stock’s price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street’s biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.

 

Every week, I take an in-depth look at big names that are telling important technical stories. Here’s this week’s look at five big stocks to trade.

Up first on our list today is $7 billion real estate investment trust Apartment Investment and Management (AIV) , better known as Aimco. This residential housing REIT has been a stellar performer in 2016, up almost 13% on a price basis since the calendar flipped to January. But don’t worry if you’ve missed the move in Aimco. This stock could be about to kick off a second leg higher in September.

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Aimco is currently forming an ascending triangle pattern, a bullish continuation pattern that’s formed by horizontal resistance up above shares (at $46) and uptrending support to the downside. Basically, as Aimco bounces between those two technically significant price levels, shares have been getting squeezed closer and closer to a breakout through their $46 price ceiling. When that happens, we have our high-probability buy signal in this stock.

 

Relative strength, which measures Aimco’s performance versus the rest of the broad market, is looking bullish here. Our relative strength line has been forming an uptrend since December, indicating that Aimco is still beating the rest of the market, even now. Once $46 gets taken out, it’s time to buy.

Know the cause of REITs Breaking Out

Just six months or so ago, higher interest rates from the Fed seemed like a near-certainty, sending interest-sensitive stocks such as real estate investment trusts, utilities and MLPs plummeting at the start of 2016. Since then, though, things haven’t quite worked out the way Wall Street expected.

 

Interest rates, for instance, haven’t been touched since last December, when Janet Yellen & Co. increased the fed funds rate for the first time in about a decade. One result of that do-nothing interest rate has been that REITs have been playing catch-up all year long, rebounding from the rate hikes that never happened and making up for the mispricing.

 

For instance, the SPDR Dow Jones REIT ETF  (RWR)  , which tracks a basket of REITs, is up 9.5% year-to-date, stomping the broad market on top of a whopping 4.2% dividend yield.

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But don’t worry if you’ve missed the upside in the REIT world lately. As strong as the price action has been in REITs in 2016, many of these issues look ready to blast off with another leg higher this fall. To figure out which REITs are in play here, we’re turning to the charts for a technical look at five big real estate investment trusts to buy for gains…

 

In case you’re unfamiliar with technical analysis, here’s the executive summary:Technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock’s price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.

 

Without further ado, here’s a rundown of five technical setups that are showing solid upside potential right now.

Up first on the list is $5 billion senior living community landlord Senior Housing Properties Trust  (SNH) . SNH has been a serial outperformer in 2016, rallying more than 47% since the calendar flipped to January. Despite the size of the up-move, this trust still pays out a huge 7% dividend at current price levels. Even better for SNH shareholders, this stock could be heading even higher in the near-term thanks to a bullish price setup on the chart.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks with serious upside potential in the next 12-months. Learn more.

SNH is currently forming an ascending triangle pattern, a bullish continuation setup that’s formed by horizontal resistance up above shares at $22.50, and uptrending support to the downside. Basically, as SNH bounces in between that pair of technically significant price levels, it’s been getting squeezed closer and closer to a breakout through our $22.50 price ceiling. When that breakout move happens, we’ve finally got a buy signal shares.

 

Relative strength, which measures Senior Housing Properties Trust’s price performance vs. the rest of the stock market, is an extra indicator to keep an eye on here. That’s because SNH’s relative strength line is holding on to an uptrend since the end of last year, an indication that this big REIT is continuing to outperform this spring. As long as that relative strength uptrend remains intact, expect to see continued outperformance from this stock.

Is the Stock useful

Put down the 10-K filings and the stock screeners. It’s time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.

 

From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It’s a concept that’s known as “crowdsourcing,” and it uses the masses to identify emerging trends in the market.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks with serious upside potential in the next 12-months. Learn more.

Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.

 

While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis.

 

Today, we’ll leverage the power of the crowd to take a look at some of the most active stocks on the market.

Leading off our list of big-volume stocks is banking giant Bank of America  (BAC) . BofA is pushing just over 1% higher during an active trading session this afternoon, driven by the technical move that shares actually triggered more than a week ago.

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After flirting with a breakout through $15 resistance for most of 2016, shares finally broke out above that long-term price ceiling in August. Since then, Bank of America has been shoving its way higher on the way to resistance up at $18.

 

This stock’s momentum story looks attractive right now. If you haven’t bought Bank of America yet, there’s still plenty of upside room on the way to $18.

Find the isead of deliver big gains

We’re still experiencing a tale of two markets as we round the corner for the final week of August – while the S&P is up a bit over 5% year-to-date, nearly half of the stocks in the big index are actually up 10% or more since the calendar flipped to January. Simply owning more of the stocks that are working in this environment and fewer of the ones that aren’t could hold the keys to substantial outperformance this year.

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To lock onto which stocks you’ll want to own in the month ahead, we’re turning to a fresh set of Rocket Stocks to buy for gains this week.

 

For the uninitiated, Rocket Stocks are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts’ expectations are increasing, institutional cash often follows. In the last 364 weeks, our weekly list of five plays has outperformed the S&P 500’s record-breaking run by 79.6%.

 

Without further ado, here’s a look at this week’s Rocket Stocks.

Leading things off is social networking giant Facebook  (FB) . At a glance, it’s not hard to see that Facebook has been a leader in 2016. Since the calendar flipped to January, this big stock has rallied nearly 20% higher, leaving the rest of the broad market in its dust. And that outperformance looks likely to keep up as Facebook pushes up on all-time highs.

 

Facebook is the most popular Web site on the Internet. In total, Facebook boast 1.6 billion monthly active users worldwide, an utterly massive user base that creates equally big growth opportunities for Facebook’s revenue model. The firm has been increasing its monetization efforts lately, and improvements in the firm’s ecosystem of apps is helping to drive user engagement. By extension, that’s boosting the number of ads Facebook can serve.

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Ad revenues made up more than 90% of Facebook’s total sales last year, but it’s where those sales dollars came from that tells investors quite a bit about this company’s growth potential. For instance, while U.S. users only make up about 15% of traffic, they generate nearly half of Facebook’s ad sales. If the firm can ramp up its monetization in other markets to even a fraction of what it sees here at home, then the growth potential is immense.

Put simply, Facebook has Wall Street convinced that its best days are ahead of it — and for good reason.

Facebook is a holding in Jim Cramer’s Action Alerts PLUS charitable portfolio. On Friday, Cramer and Research Director Jack Mohr wrote that they:

wanted to provide subscribers with a view of how we make sense of an important event such as the Olympics, and how we learn with an investment perspective in mind. We think the Games truly gave a peek into the captivating capabilities of Facebook, and to a broader extent, the ongoing evolution of the media landscape, with Facebook emerging as a dominant force. We can be assured that Facebook’s ability to engage users does not go unnoticed by its true customers, the advertisers.