BALTIMORE (Stockpickr) -- Stocks may have closed lower yesterday, but that didn't stop the S&P 500 from recording a 4.9% gain for the first quarter of 2010. That gives 2010 the strongest start of any year in the past decade -- a significant benchmark given the economic malaise of the past couple of years. But most investors aren't focused on breaking records Instead, they're looking ahead to key economic numbers set to be released on Friday.
Ultimately, big-name issues are going to be key to resolving the direction of the market as we enter April, so what better time to apply technical analysis to Wall Street's biggest names?
Technical analysis uses a stock's price movements to determine where shares are headed in the future. Technical charts are used every day by proprietary trading floors, the street's biggest financial firms and individual investors to get an edge on the market. And according to some sources, skilled technical traders can bank gains as much as 90% of the time.
Every Thursday, Stockpickr analyzes the technicals for some of Wall Street's highest-volume stocks and takes a look at how to trade them. Here's
at how some of the biggest names on Wall Street are trading technically.
As a $152 billion energy company,
no doubt has the attention of Wall Street analysts and individual investors alike. Despite upticks in long-term energy demand and sizable stakes in some of 2010's most high-profile exploration projects, the company has fallen short of the broad market so far this year. But that could be about to change if shares can make it above a key resistance level.
Last summer was an arguably difficult time for petroleum companies. With extraction costs at relative highs thanks to capital-intense projects started at the onset of the commodity surge of 2008, scores of oil producers - and nations in the Middle East, for that matter - were looking at red ink amid rock bottom oil prices. Since then, rebounding oil prices have repaired the fundamentals of most of the oil industry, and Chevron's no different. But while operational details could take months or years to make their way to the company's valuation, the technicals point to a potential near term rally in shares of Chevron.
The company broke down at the beginning of 2010 as word of job cuts ruffled feathers of investors who were hoping for an instant win with Chevron. But the stock rebounded, climbing above the company's 50-day moving average in mid-March. Now, with the stock bumping its head on a $76 resistance level, a break above it could make for a quick move to $81. Wait for an open above the blue horizontal line before going long.
Munich-based technology company
is looking at a similar pattern right now, but the outcome could potentially be far more lucrative for long-side shareholders.
Siemens focuses on capital intensive electronic products such as wind turbines, health care solutions and automation solutions, and as a result, it saw serious consequences as corporate credit lines dwindled going into last year. Now, however, with many companies and governments in "growth and resurgence" mode, Siemens should see its revenue numbers tick back up in kind.
Shares of the company saw a bearish double top resistance line drawn back toward the end of 2009, but with shares back at resistance levels and considerably more bullish sentiment at present, the potential for an upside breakout is very real. That breakout would put Siemens at a new 52-week high and mark a strong buy signal for traders. Before getting in on this long-side action, wait for the company to make a close above that resistance level.
On the other side of the spectrum, government contractor
saw a nearly 7% tumble in yesterday's trading thanks to poor fourth-quarter earnings results and a less-than-optimistic earnings outlook for its fiscal 2011 year.
Since last summer, SAIC had been trading in a relatively well-defined trading channel. But yesterday's price action pushed the company's shares well below trend channel support, a move that suggests even lower prices are in store this week. With considerable overhead resistance, wait for any compensating buy pressures today to fizzle out before betting against this company. There's plenty of room -- and time -- for SAIC to move lower.
To see this week's trades in action, check out the
portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.
Jonas Elmerraji is the editor and portfolio manager of the
Rhino Stock Report
, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including
, and has been featured in
Investor's Business Daily