The stage is set for a December rate hike following the Federal Reserve's decision to leave interest rates unchanged yet again on Wednesday. And so, with the Federal Reserve's policy statement out of the way this week, the path is clear for the election to retake the reins as the biggest potential black cloud hovering over the stock market this fall...
But while most investors fixate on next Tuesday's vote, it's important to remember that not all stocks are stuck in a rut with the news cycle right now.
In fact, some of the biggest names on Wall Street are teetering on the edge of breakout territory this week. These mega-cap trades could fuel some equally big gains for your portfolio in the final two months of 2016. So, to figure out which big stocks you should own - and when to buy them - we're turning to the charts for a technical look.
First, a quick note on the technical toolbox we're using here: technical analysis is a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.
Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at five big stocks to trade...
HSBC Holdings plc
Up first is financial services giant HSBC Holdings plc (HSBC) . This big bank stock is down 6% since the start of the year, but that year-to-date performance stat masks a more recent rally that's been taking shape in shares; since bottoming in late June, HSBC is up about 28%. Don't worry if you've missed out on that upside so far - this big financial stock is closing in on a breakout buy signal in November.
HSBC is currently forming an ascending triangle pattern, a bullish continuation setup that's formed by horizontal resistance up above shares at $38.50, and uptrending support to the downside. Basically, as HSBC bounces in between those two technically important price levels, it's been getting squeezed closer and closer to a breakout through that aforementioned $38.50 price ceiling. When that breakout happens, we've got our buy signal.
HSBC's relative strength line, down at the bottom of the price chart, adds some extra confidence to the prospect of a buy signal in this stock. That's because HSBC's relative strength has been in an uptrend of its own since this summer's price bottom, indicating that shares have been outperforming the rest of the market ever since. In other words, the recent upside in this stock hasn't been because of market conditions - it's been in spite of them. Once $38.50 gets taken out, it makes sense to buy HSBC.