As we round out the final week of the month, November is adding up to be a pretty strong month for U.S. stocks. In the 20 days since the presidential election, the "Trump Rally" has pulled the S&P 500 Index 3.3% higher on a total returns basis, pushing the big index to new all-time highs.
But don't limit your stock focus stateside. While markets are betting that President-elect Trump will enact policies that favor firms here at home, some foreign stocks that also trade here on U.S. exchanges are actually showing bullish price setups right now. And after prolonged underperformance in ex-U.S. stocks this year, these foreign trades could actually be about to make up for lost time in the final stretch of 2016.
To figure out which foreign stocks are worth buying this week, we're turning to the charts for a technical look at five of them that are breaking out.
In case you're unfamiliar with technical analysis, here's the executive summary: technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action 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.
Without further ado, here's a rundown of five technical setups that are showing solid upside potential right now.
Up first on our list of overseas breakouts is London-based energy giant BP (BP) . BP has been a strong performer all year long, rallying almost 17% year-to-date on a total returns basis thanks to a rebound in energy prices. The good news this fall for BP shareholders is that this big oil and gas company is showing off signs that shares could be in store for a second leg higher from here.
BP is forming a long-term ascending triangle pattern, a bullish continuation setup that's formed by horizontal resistance up above shares at $36, and uptrending support to the downside. Put simply, as BP ricochets in between those two technically important price levels, shares have been getting squeezed closer and closer to a breakout through their $36 price ceiling. When that breakout happens, we've got our buy signal.
Relative strength, down at the bottom of BP's price chart, provides an additional piece of evidence for the breakout. Our relative strength line, which measures BP's outperformance versus the rest of the broad market, has been in a well-defined uptrend since late April - as long as that uptrend in relative strength remains intact, BP is statistically more likely than not to keep on outperforming. The long-term nature of BP's price setup comes with long-term upside implications once shares crack that $36 price ceiling.