Major U.S. equity benchmarks are looking to resume their ascent into uncharted territory following last week’s stretch of choppy trading. Although optimism is high on Wall Street, investors are having to digest mixed data that could encourage more profit taking over the coming sessions; ISM data from May hints of a contraction in the manufacturing sector while better-than-expected motor vehicle sales are resonating well among auto stocks and industrial metals [for more commodity futures news and analysis subscribe to our free newsletter].
Amid the recent pullback on Wall Street, bargain shoppers are on the prowl again 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.”
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].
Enbridge Inc. (ENB)
Consider ENB’s 1-year daily performance chart below. This stock has sunk below its 50-day moving average (blue line) which hints at a potential trend reversal; however, it actually appears to be rebounding off its 200-day moving average (yellow line), which might foreshadow an even bigger rebound over the coming weeks. From a technical perspective, ENB has been in a stellar uptrend over the last four years, managing to rebound off its 200-day moving average on several occasions with the most recent one taking place in November of 2012.
Monsanto Company (MON)
Consider MON’s 1-year daily performance chart below. This stock is trading right underneath its 50- and 5-day moving averages as profit taking pressures have permeated it over the last two weeks. Although it may sink to its 200-day moving average before rebounding, MON’s uptrend is fairly strong considering that its 50-day moving average has been steadily trending above its 200-day average over the last year. The stock also appears to have carved out support above $100 a share seeing as how it managed to hold above this level in late February and late March of this year.
Archer Daniels Midland Co. (ADM)
Consider ADM’s 1-year daily performance chart below. This stock has been on a steep run higher since bottoming out at $24.38 a share in mid-November of last year. Since then, this stock has posted higher-highs while managing to pull back to right around its 50-day moving average during its corrections. ADM is currently trading below both its 50- and 5-day moving averages; however, we feel that the bulls are still in the driver’s seat here, judging by the fact that it is holding above $32 a share, which is a noteworthy support level that it managed to rebound off in late April of this year.
Disclosure: No positions at time of writing