BALTIMORE (Stockpickr) -- Could March be the start of a rally in 2010? Following two months of fickle stock market performance, futures are pointing to a second consecutive bullish day on Tuesday as the S&P 500 index pushes toward a breakout over a key resistance level. That upward move could spell gains for many long-only investors, who've been suffering from market malaise in recent weeks.
But we're not waiting to see if the S&P will make it over its resistance levels or if this week will bring more up days -- instead, we're turning back to the technicals to make profitable trades regardless of which way the market's headed.
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.
Tax preparation giant
is reeling in 2010. The company lowered its guidance for the fiscal year 2010, sending shares significantly lower last week. That may come as some surprise to investors who were counting on the looming tax season giving H&R Block a seasonal pop, but with shares oversold, it's set up a potential upside trade for this week.
Shares of H&R Block broke down last Wednesday to $16, the stock's present support level. Now, with shares consolidating right around $17.20, a breakout above HRB's weaker current resistance level could signal that a much stronger upside trend is in the wings.
Still, with several of those weak resistance levels overhead, don't consider going long this issue until it breaks above the $17.25 level. H&R Block's earnings release next week could be the catalyst to higher ground that this stock needs right now.
There's another potential bullish breakout forming in Peruvian financial services company
. BAP has had a mixed year in 2010, with shares essentially flat, but an ascending triangle pattern could have the stock seeing higher ground by the end of the month.
Right now, BAP is seeing resistance at $80, a level that's restraining the upside on the stock for the time being. But with higher lows since early November 2009, a slow-forming ascending triangle pattern suggests that a breakout is forthcoming, albeit not for a couple of weeks.
Regardless, the slow-moving nature of this pattern suggests that when a break does happen, it's going to be one worth watching. Set your trade trigger to a close above the $80 level.
Things are somewhat less bullish for
Cabot Oil & Gas
. The $4.3 billion oil and gas operator is already down more than 6% in 2010, and bigger losses could be on the way right now thanks to some serious technical black clouds that have been forming since late 2009.
Shares of the company are forming a bearish head-and-shoulders pattern, a signal that shares could be in for a $7 or more downside move. While the right shoulder isn't yet completely formed, resistance at the stock's 50-day moving average should wrangle shares back down to the shoulder level, the uptrending blue line that signals the down side trade.
Wait for a close below shoulder level before thinking about shorting shares of COG.
To see these plays in action, check out the
-- 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