BALTIMORE (Stockpickr) -- 2010 is a year with banner potential -- or at least so say the sentiment numbers. Nearly every major indicator of investor sentiment is showing a bullish push since Jan. 1. And why not? With major broad-based indexes such as the S&P 500 outperforming last year's January slide by a decent clip (6.33% so far in the case of the S&P) and with futures predicting higher market levels yet this week, there's reason enough to go in search of the stocks that are best-set to move higher.
Once again, that means we're taking a look at the week's technical setups.
Technical analysis is a way for investors to quantify qualitative factors such as investor psychology based on a stock's chart patterns 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.
But all too often, investors don't know where to start. So every week, Stockpickr takes a look at stocks that could be staging a technical move soon and compiles a portfolio of promising
Here's a look at this week's stocks.
Agricultural chemical giant
hasn't been a stranger lately.
As one of the first large-cap stocks to report numbers in the new year, we already took a look at the stock's potential as a
. But now, with fundamental stars aligning, the time could be right to make another play on shares of the company.
Despite that seemingly glowing intro, Monsanto has been having anything but a blemish-free year. Monsanto is a pioneer in the realm of genetically modified foods, and it's one of the biggest suppliers of modified seeds to farmers. But there are health concerns rumbling in the anti-genetically-modified-food crowd and allegations of organ damage as a result of eating its biotech corn. Likewise, price-cutting in the company's consumer-focused Roundup brand of weed killer has crushed the once-lush margins on a best-selling product.
But put the fundamentals aside for a minute. With shares fast approaching a key short-term support level right around $79.80, and a bullish crossover of the 50-day moving average, things might not be quite so bleak. If you want to go long Monsanto, though, wait for a bounce off the green line.
is a $3 billion regional bank that's been going strong in the last quarter, pulling in more than 8% income growth at the hands of thick, 22% net margins.
Regional banks proved to be hot in 2009 after details shook out that their exposure to risky toxic securities was dwarfed by the risk-taking at the national companies.
And the trend looks likely to stay in place for 2010 as deposits at Cullen/Frost stay competitive and loans are able to perform above the big-banks' levels. And from a technical standpoint, this stock could be one of the most interesting ones to watch this week as it hits its head against an important resistance level.
Cullen/Frost didn't look quite so hot back in October as a bearish head-and-shoulders pattern set the stock up for a big slide into the beginning of November, but that's certainly changed as shares have rallied for most of the last three months. With shares right around that former head level, a pop above the purple line suggests that a legitimate breakout could happen. Wait for at least one trading session of sustained prices over the purple level, and only then consider going long.
Biopharmaceuticals are big business at
, a $16 billion therapy developer based in Cambridge, Mass.
The company currently enjoys fairly unchallenged profitability thanks to two market-leading drugs used to treat MS. And partnerships with larger distributors could open the door to more lucrative deals -- besides marking Biogen as a potential takeover target.
The technicals echo that bullish angle, with an ascending triangle soon to complete and the potential for a breakout starting at the $55 level. A key support level notches back the downside risk on this play, making it a very tradable pattern for this week. Wait for a sustained close above $55 before thinking about putting skin in the game.
To see these plays in action, check out the
-- Written by Jonas Elmerraji in Baltimore.
At the time of publication, author had no positions in stocks mentioned.
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 Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.