U.S. markets are back on track for a double-digit ending in 2016. With just 45 days left until the calendar flips over to 2017, the S&P 500 is sitting on total returns of 8.6%, putting the big market average on pace for a 10% return this year.
That's not to say that it's been an easy year to make money as a stock market investor - 2016 has been a year of false starts, sideways grinds, and plenty of opportunities to sell at the wrong moment. So, odds are that the vast majority of individual investors are meaningfully underperforming the S&P here.
That's the bad news. The good news is that there's still time to take advantage of some big breakout opportunities in stocks this fall...
Following last week's post-election bounce, the S&P 500 is back to less than 1% away from hitting new all-time highs, and a new high water mark in the stock market averages could help pull more large-cap stocks over the edge of breakout territory. To find the stocks that stand the biggest chance of upside moves from here, we're turning to the chart for a technical look at five big breakout trades that could lead the S&P in the final stretch of the year.
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...
Up first on the list is $72 billion chipmaker Texas Instruments (TXN) , a stock that's been leading the pack all year long. While the average tech stock is up 11.5% on a total returns basis in 2016, Texas Instruments has tripled those gains, handing investors a 33.4% rally year-to-date. But don't worry if you've missed out on that big move in Texas Instruments so far - the price action is pointing towards a second leg higher in shares.
Texas Instruments is currently forming an ascending triangle pattern, a bullish continuation setup that's formed by horizontal resistance up above shares at $72, and uptrending support to the downside. Basically, as Texas Instruments bounces in between those two technically important price levels, it's been getting squeezed closer and closer to a breakout through its $72 price ceiling. When that breakout move happens, we've got our high-probability buy signal in TXN.
The side-indicator to watch in Texas Instruments is relative strength, the line down at the bottom of the stock chart. TXN's relative strength line has been in an uptrend of its own stretching back to January, signaling that this stock's outperformance hasn't been slowing. Wait for $72 to get taken out before building a position in Texas Instruments - shares are within striking distance of that key level this week.