New month, new market? I hope not.
All told, November turned out to be a stellar month for the stock market. The S&P 500 gave investors total returns of 4.4% for the calendar month, performance that doesn't sound all that outrageous until you consider the fact that it actually annualizes out to 72.2% gains if it kept up for the next 11 months.
That breakneck price performance for the last month has the calendar rolling over to December on a high-note. All of the major stock indices managed to make new highs in November, which, simply put, means that just about any long-term stock market investor is sitting on gains right now. That's a very good thing for equity market sentiment.
Just as importantly, stocks are looking well-positioned for more upside in December. As I write, some of the biggest names on Wall Street are teetering on the edge of breakout territory. To take advantage of that bullish positioning, we're turning to the charts for a technical look at five big stocks that are breaking out.
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.
Oil stocks rallied hard Wednesday. Crude prices were up more than 8% by the time the closing bell rang in New York, and along with it came stock prices for the entire energy sector. One of the notable winners was oilfield service giant Schlumberger (SLB) , a stock that enjoyed more than a 5% rally of its own on Wednesday.
That up-move in Schlumberger, a holding in Jim Cramer's Action Alerts PLUS portfolio, was enough to shove this $115 billion energy stock's total returns to almost 23% for 2016. Don't worry if you've missed out on that recent upside in SLB, however. This stock looks ready to kick off a second leg higher this fall, following yesterday's price move.
Schlumberger is currently forming a textbook example of an ascending triangle pattern, a bullish continuation setup that signals higher ground ahead in this stock. The pattern is formed by horizontal resistance up above shares (at $84, in the case of SLB), and uptrending support to the downside. Basically, as Schlumberger slingshots in between those two technically important price levels, it's been getting squeezed closer and closer to a breakout through that aforementioned $84 resistance level.
Shares finally closed slightly above $84 in yesterday's session. At this point, the breakout is a little too small to be considered material, but some continuation in today's trading session would provide enough confirmation to make SLB a buying opportunity.