This column was originally published on RealMoney on May 9 at 2 p.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.
Most traders and investors are aware that the market is now overbought on a technical basis. The
is trading almost 6% above its 50-day moving average, which makes it hard to justify putting a lot of new money to work at these levels. However, even though most stocks are quite extended, investors still can find some opportunities.
another four stocks that are fundamentally strong, have very good earnings numbers and sport technical patterns that are likely to support more upside as long as the market doesn't enter a major correction.
Ben Bernanke and his merry band meet today to make their decision on interest rates and give their assessment of the economy. Most traders expect the
will leave rates unchanged yet again. The two times that the Fed has met this year have been very positive for the market on the following day. After the first meeting, the
was up 159 points, and after the second meeting it rose 98 points. The third time could be a charm.
Let's take a look at four stocks that may have a good chance to move higher in the coming weeks:
Boeing continues to perform very well as the orders for new planes continue to pour in. The stock has been building a base above the 200-day moving average for the last five months. Then, in mid-April, it broke out of the consolidation on heavy institutional buying.
It has now entered another short-term sideways pattern above its prior support levels and the 50-day moving average. This is a very good pattern from a technical perspective, and the current action usually leads to higher prices. The money stream and on-balance volume are holding at their highs.
If Boeing can hold above the $92 level and then break above the April high of $95.58, we will probably see another leg up in the stock. A break below $90 would nullify this pattern.
Halliburton has certainly had its share of problems over the last couple of years. Even though its earnings and fundamentals are very good, it has lagged most of the stocks in the oil and gas service sector. However, the recent strength of the stock may mean that that scenario is in the beginning stages of changing.
Halliburton has glided under a declining 200-day moving average for the last 10 months. That changed in early April when it finally broke above that resistance and held above it. It has now spent a few days consolidating above the 50-day moving average and looks like it may be ready to challenge the current resistance of $33-$34.
If the stock can break above those levels, it may have a good chance to make it to the next major resistance areas between $38 and $40. A breakdown below $31 would probably lead to another leg down.
Check Point gapped higher on April 26 after reporting earnings. A few days later it tested that gap and now looks ready to challenge its February high of $25.03.
The money stream and on-balance volume look ready to support that move.
Major discount retailer Big Lots is also forming a tight consolidation pattern above its 50-day moving average.
It has had quite a big move so far this year, moving up almost 45%. If it can continue to hold above the $31 level, we may see yet another move higher. The money stream and on-balance volume are also supporting the possibility of another move up.
Even in extended markets you can usually find stocks that are consolidating and have a good chance of making another move higher. Just remember to keep close sell stops under current support levels in case the market or the stock begins to break down.
Also, make sure that when the stock breaks out of its consolidation, it does so on increasing volume. If the breakout occurs on lower than normal volume, it may be a warning that the move is false and may quickly reverse.
At time of publication, Manning had no positions in any of the stocks mentioned in this column, although holdings can change at any time.
Mark Manning, AAMS, is an Accredited Asset Management Specialist and Registered Investment Advisor with Butler, Wick & Co., where he specializes in wealth management. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Manning appreciates your feedback;
to send him an email.