The bears finally got their way in 2014. Rampant selling pressures have rattled investors’ confidence on Wall Street amid sluggish data releases on both sides of the Atlantic, coupled with fiscal and political instability in emerging markets, which has raised worries over the possibility of contagion. With earnings season still well underway at home, major equity indexes have paved a rocky start to 2014, prompting bearish pundits to cite the coveted January barometer as an omen of more downside to come [for more commodity futures news and analysis subscribe to our free newsletter].
Given the recent downturn in the stock market, many are using this opportunity to favorably position themselves once the bull train resumes course. As such, below we take a look at two 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. Thirdly, 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 5 Commodity Trading Mistakes You Could Be Making].
Pioneer Natural Resources (PXD)
Consider PXD’s two-year daily performance chart below.
This stock has traded lower for the past three months since peaking at $227 a share in mid-October of 2013. Over the last month PXD’s decline has decelerated, leading us to believe that bearish forces might be losing their grip on the stock; furthermore, this stock also neared support around $165, a support level that it managed to rebound off in late August of last year. Given PXD’s longer-term uptrend and near-term downturn, investors might want to consider a long position at current levels with a stop-loss around $163 a share in case the correction isn’t quite over yet.
Halliburton Company (HAL)
Consider HAL’s two-year daily performance chart below.
This stock corrected lower after peaking at $56 a share in mid-November of last year and has since drifted sideways for the past two months. In addition to nearing its 200-day moving (yellow line), HAL has also rubbed against $48, a support level that it previously managed to rebound off in early October of 2013. Given the stock’s strong uptrend in relation to the recent downturn, investors might want to consider a long position at current levels with a stop-loss around $48 a share in case the correction isn’t quite over yet.
Disclosure: No positions at time of writing