Bullish euphoria seems to have evaporated over the past week as profit-taking pressures have once again swept over Wall Street in light of the potential Fed taper coming up in September’s FOMC meeting. With Treasury yield on the rise again, many are locking in profits on the equity front; however, a surprise decision from the Fed to hold off from tapering entirely this time around has the potential to ignite a furious rally that will catch most off guard [for more commodity futures news and analysis subscribe to our free newsletter].
Amid the ongoing pullback on Wall Street, bargain shoppers are in search of trending stocks at attractive levels. As such, below we take a look at three big commodity stocks that are trending higher, but have slipped in the last few trading sessions, thereby offering an attractive opportunity to “buy on the dip” in the near future.
The stocks included here are rated as “buy” candidates for three reasons: first and foremost, each of these companies boasts a market cap upwards of $10 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 above their 200-day moving averages, thereby implying they are in longer-term uptrends; lastly, these stocks are also trading below their 5-day moving averages, which makes them attractive for swing traders looking to buy in before they rebound. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques [see 5 Commodity Trading Mistakes You Could Be Making].
Archer Daniels Midland Co. (ADM)
Consider ADM’s one-year daily performance chart below.
This stock has been climbing higher along its 50-day moving average (blue line) since bottoming out in mid-November of 2012. ADM has been pulling back in recent days and appears to be nearing support around its 50-day SMA close to $36 a share. Be sure to utilize a tight stop-loss here because a steeper correction may develop seeing as how this stock is sitting on a hefty +30% gains YTD.
Chevron Corp. (CVX)
Consider CVX’s one-year daily performance chart below.
This stock has crossed below its 50-day SMA, but it remains above the 200-day one, which appear to be a solid support level; notice how CVX has rebounded off the $115-$117 levels on several occasions this year, most recently in late June before it proceeded to hit $127.83 a share on 7/25/2013. Watch for CVX to establish definitive support above its 200-day SMA before jumping in long.
Air Products & Chemicals (APD)
Consider APD’s one-year daily performance chart below.
This stock has come down quite sharply over the past week, but it appears to be nearing its 50-day moving average, which has historically served as a viable support level. APD remains in a strong uptrend and therefore any dips should be used as buying opportunities; remember to utilize a tight stop loss at $100 a share or below in case profit taking pressures intensify and APD proceeds to retest the $95 support level.
Disclosure: No positions at time of writing