Major U.S. equity benchmarks continue to inch higher into previously uncharted territory as investors remain hopeful that the Federal Reserve will remain accommodative and postpone the much-feared “taper,” in light of the recent federal government shutdown. Upbeat corporate earnings have helped to keep optimism levels elevated, but a number of bellwethers have expressed global growth concerns by revising their outlooks lower, making for a very mixed picture [for more commodity futures news and analysis subscribe to our free newsletter].
Amid the “hope” rally and postponed debt-ceiling issue at home, many remain hesitant to jump in long. As such, below we highlight two commodity stocks that may offer an attractive short selling opportunity for those looking to bet against some of the stellar run-ups already seen across Wall Street.
The stocks included here are deemed to be great trading candidates for three reasons. First and foremost, each of these companies boasts a market cap upwards of $1 billion along with average daily trading volumes topping the $1 million mark, in an effort to weed out smaller, more volatile, trading prospects.
Second, these securities are trading below their 200-day moving averages, thereby implying that they are in longer-term downtrends. Lastly, these stocks are also trading above their five-day moving averages, which makes them attractive for swing traders looking to sell short before they resume their downtrend. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques [see How To Lose Money Investing In Commodities]:
Agnico-Eagle Mines (AEM)
Consider AEM’s one-year daily performance chart below.
This stock appears to have carved out a bottom for itself right around $25 a share, seeing as how it has managed to hold above this level on several instance this year alone. Although this is certainly encouraging, AEM remains in a worrisome downtrend as evidenced by the fact that it has failed to summit resistance (red line) at $35 a share on two occasions over the past year. This stock has attracted buyers in recent days; however, the longer-term downtrend at hand should not be ignored by more conservative investors.
Marathon Petroleum Corporation (MPC)
Consider MPC’s one-year daily performance chart below.
This stock may be entering into a downtrend judging by its recent failure to hold above its 200-day moving average after a rebound attempt earlier this August. MPC hasn’t posted steep losses YTD, but the stock has posted a series of lower-highs and lower-lows, which is worrisome because it suggests that bullish momentum is leaving the security. MPC’s recent failure to summit $75 a share on 10/23/2013 is further evidence that bearish pressures are overwhelming the buyers here.
Disclosure: No positions at time of writing