BALTIMORE (Stockpickr) -- In the last year and a half, investors have learned that strong fundamental performance doesn't necessarily correlate with stock gains. Even the best stocks became oversold into the first quarter of 2009. And while financial markets took a shellacking in 2008, technical traders were one of the few groups that managed to consistently make profits.
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.
That's why Stockpickr takes a look at stocks that are staging a technical move in the coming week and compiles a portfolio of promising
. Here's a look at this week's stocks.
Investment data firm
Dun & Bradstreet
has been in the midst of a sustained uptrend since the beginning of October.
Since that time, shares of the stock have rallied 10%, while the
struggled to keep up. Though D&B's business has been hit by a contraction in financial and investment companies, it benefits from strong free cash flow generation and overwhelmingly recurring revenues.
The technicals look enticing for this stock as well. With resistance (the price level a stock has trouble pushing above) around the $81 level and an uptrend pushing shares very close to that point right now, D&B is forming an ascending triangle right now - a bullish pattern that points to a breakout when and if the stock is able to push through that resistance level.
If shares make it above $81 in the next couple of trading sessions, D&B should be clear to rally up to its 52-week high of $84 before it hits any meaningful resistance.
Natural Resource Partners
has seen significant price appreciation since September, rallying nearly 22% in that time, a couple of clues suggest that the coal producer has further to go.
Four of NRP's last five trading sessions have resulted in a lower share price, as the stock pulled back to its short term support level (the price level a stock has trouble moving below) right above $23 per share. That's a good sign -- a pullback takes heat off the stock and limits the chances over blowing momentum into overbought status. The last five times NRP pulled back to a significant support level, the stock rallied in the ensuing trading sessions.
While a sustained trend line is difficult to map out on NRP's chart, the stock's Fibonacci retracements (the horizontal blue lines that take place at key Fibonacci ratios) show that the stock has been bouncing between the lines. In other words, a break above the top line could mean a breakout to a new highs.
For this potential trade to trigger, wait for shares to get above $25.
This week's sole short setup is information storage company
While Iron Mountain is the biggest firm in its industry, competition from the likes of
threaten to challenge the company's records management stronghold. Shares have tumbled more than 20% since early September, setting up a strong technical downtrend for us to play off of.
Three technical indicators suggest that Iron Mountain will move lower in the next week: a very well-defined downtrend (the thick blue line), strong volume confirmations of downward moves (the red boxes), and a the recent 50-day moving average's cross under the 200-day moving average (the thin blue line traveling under the thin red line).
Wait for a short-term upward push back to the blue trend line before considering taking a stake in this stock.
For the rest of this week's potential technical set-ups, check out the
Next week, I'll be taking a look at the technicals on the stocks that you recommend. To submit a stock worth looking at, just add a comment below this article that includes the stock's ticker.
-- Written by Jonas Elmerraji in Baltimore.
At the time of publication, Elmerraji had no positions in stocks mentioned.
Jonas Elmerraji, based out of Baltimore, 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.