Our group of 8 stocks, ranked by Market Cap, were led by Apple (AAPL), followed by Rio Tinto (RIO), Cnooc (CEO), Barrick Gold (ABX), Baidu (BIDU), Priceline (PCLN), HDFC bank (HDB), and Yanzhou Coal (YZC).
The stock screen used the following parameters:
- % Chg EPS; Q to last yr Q of 25% or more
- % Chg EPS; YTD to last YTD of 25% or more
- % Chg Revenue; YTD to last YTD of 25% or more
- Return on Average Equity of 17% or more
- 5-yr Revenue Growth Rate of 15% or more
- Market Cap of at least $50M
- Net Profit Margin of 18% or More
- Current price above $12
- Average 10-day volume above 250,000 shares
Next in line is Rio Tinto (RIO). The stock is trading within a declining channel established in April 2011. The price decline is on course to test support at $40. However, yesterday's surge in the markets was enough to see RIO rally to channel resistance. While the likelihood of another strong day like yesterday's is low, there is an opportunity for buyers to break RIO out of its rut; a push above $54 would achieve this. If this was achieved, then RIO would be on course to test its next level of supply starting at $61.85. The 200-day MA, currently at $62.54 and falling, may itself bring some sellers. The more likely flip side is for prices to resume their downward trend, starting with today.
In third spot is Barrick Gold (ABX). The chart I have been using for this stock has been unchanged in months. Today is no different. The stock remains range bound by $42/43 support and $54/55 resistance. Stocks which behave in such fashion can be bought on drops to around $45 and sold on moves to $53. Alternatively, small positions can be built over a number of months in anticipation of an upward move (more likely if gold prices continue their advance).
Fourth is Baidu (BIDU). In early November the stock had managed to escape the boundaries of its July decline, regaining support of both its 50-day MA and 200-day MA in the process. Unfortunately, the momentum couldn't be maintained. BIDU threw away $135 support, dropping below both 50-day and 200-day MAs in the process. The 50-day MA also crossed below the 200-day MA ("Death Cross"), marking the start of a new long-term downtrend. Looks on course to test $102.50 support; a break above $145 will offer bullish momentum traders an opportunity to rejoin the party.
New entrant, Las Vegas Sands (LVS), has been range bound for the best part of a year, much like Barrick Gold (ABX). While trading inside this range it won't be attracting much attention, but it does prepare the stock for its next move forward. From March 2009 to November 2011 the stock rallied from $1 to above $50. Since the peak in November, buyers have defended $36 while sellers used psychological (whole number) resistance at $50 to take profits. Once the profit takers are done the stock will be ready to resume its advance. A sleeper pick.
In early November, Priceline (PCLN) was making a run at resistance dating back to May 2011. In the process, it had rallied above both 50-day and 200-day MAs, but was lacking the volume required to break supply. Supply eventually cracked November 8th as $525 broke with volume. But just over a week later, PCLN dropped below $525 and sellers continued to push prices lower, leaving behind a 'Bull Trap'. PCLN also saw a 'Death Cross' between 50-day and 200-day MAs. The stock is currently on course to test $425 support.
In seventh spot is HDFC Bank (HDB). The stock has traded within a consolidation bound by $27 support and $36.50 resistance. On November 21 the stock gapped below $27, turning the entire February and October consolidation into new supply. The snap rally on November 25th returned the stock to $27 and into this - now - supply zone. Further price gains will become more difficult. In addition, the stock will have to contend with supply geneated by the falling 50-day MA currently at $29.77.
The last stock to make the grade was Anglogold Ashanti (AU). The stock is trading against broad channel resistance, but this is really a scrappy consolidation. An attempt at establishing a bullish trend on a break of $47 in July failed; in doing so the stock fell back to $39 support before rebounding. For the trend to resume it will now need to clear $53 and stay there. Until then, price action will remain mixed with no clear advantage for buyers or sellers.
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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.
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