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5 Big Trades to Take This Year

Aetna


Last up is health insurance company Aetna (AET). In the last year, Aetna has rallied more than 52%, blowing the broad market's impressive performance right out of the water. But despite those huge gains, AET looks primed for even more upside thanks to one of the most classic technical patterns in our toolbox.

>>5 High-Yield Stocks Ready to Pay You More in 2014

Aetna is currently forming an inverse head and shoulders, a setup that indicates exhaustion among sellers. The pattern is formed by two swing lows that bottom out around the same level (the shoulders), separated by a deeper low (the head). The buy signal comes on a move through the neckline, which is right at $69. AET's pattern isn't exactly textbook, but the trading implications are exactly the same.

Lest you think that the head and shoulders is too well known to be worth trading, the research suggests otherwise: a recent academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits [that] would have been both statistically and economically significant." That's good reason to keep an eye on Aetna as shares creep closer to $69.

To see this week's trades in action, check out this week's Must-See Charts portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in the stocks mentioned. Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation. Follow Jonas on Twitter @JonasElmerraji
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