U.S. markets have managed to rebound ferociously over the last two weeks as bargain shoppers stepped in following the Fed stimulus-fear induced sell-off which started on 5/22/2013. With earnings seasons upon us however, the bull may be in for a rude awakening as volatile trading and profit taking can sweep over Wall Street at the slightest sign of industry bellwethers missing the mark and revising their outlooks[for more commodity futures news and analysis subscribe to our free newsletter].
Nonetheless, the trend is our friend and the bulls are still very much in the drivers seat with both feet on the gas. As such, below we highlight three commodity stocks that may offer an attractive bargain buying opportunity for those looking to jump in long but are wary of 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 $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 that they are in longer-term uptrends. Lastly, these stocks are also trading below their five-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 How To Lose Money Investing In Commodities]:
Monsanto Company (MON)
Consider MON’s two-year daily performance chart below. The Missouri-based chemicals manufacturer has been trading within a crudely defined channel (red lines) and its recent correction to the 200-day moving average (yellow line) appears to have carved out a solid support level. This stock is trading closer to the middle of its trading channel so tight-stop loss orders should be utilized here as it may retest its lower support line if markets broadly pullback.
Nucor Corporation (NUE)
Consider NUE’s two-year daily performance chart below. This stock has had a choppy uptrend, however, it is now right near the bottom of its longer-term channel; as such, traders can jump in long given the attractive upside potential along with the opportunity to closely manage downside risk by setting a stop-loss near the 200-day moving average. NUE is also yielding over 3% at the moment, making this an attractive buy for yield-hunters as well [see 5 Commodity Trading Mistakes You Could Be Making].
Phillips 66 (PSX)
Consider PSX’s two-year daily performance chart below. This stock has retraced back to its 200-day moving average, which it previously rebounded off in mid-April of 2013. The Houston-based energy company appears to be holding around this same support level, although it may briefly dip again below its 200-day moving average before resuming its longer-term uptrend; a trade below $55 a share would likely welcome accelerating selling pressures as this is a key support level.
Disclosure: No positions at time of writing