Major equity indexes are stuck in stop-and-go mode with regards to anticipating the Fed’s next move surrounding interest rates. In the latest round of back-and-forth trading, investors cheered on March’s disappointing jobs report with the belief that the slump in the labor market recovery would delay policymaker’s in their move to raise rates.
In light of renewed bullishness on Wall Street, we’re taking the time to highlight lucrative “buy” opportunities while major benchmarks continue to flirt with all-time highs. More specifically, we’re focusing on two big name commodity stocks that have endured a downtrend for some time now, but appear ripe for a rebound in the coming weeks.
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The stocks included here are rated as “buy” candidates because they have neared major support levels which they have formerly rebounded from. Nonetheless, these securities are still risky because they are trading below their respective 200-day moving averages; as such, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.
Chevron Corp (CVX)
CVX has endured a steep pullback since late July of last year, tumbling lower alongside crude oil prices. However, since mid-December of 2014, this stock has showed signs of bottoming out; more specifically, CVX has broken the trend of posting lower-lows (red line) which suggests that selling pressures are indeed waning. Furthermore, this stock has neared a major support level (blue line) which it has previously managed to rebound from, which leads us to believe that long-term buyers are finally stepping in following CVX’s steep, multi-month decline.
Be sure to utilize a tight stop-loss around $102-100 a share in case bearish pressures return.
Caterpillar Inc. (CAT)
CAT has tumbled lower alongside oil prices since peaking in July of 2014. Despite still trading underneath its 200-day moving average (yellow line), this stock is showing signs of bottoming out; first and foremost, CAT appears to have broken the trend of posting lower-lows (red line) as evidenced by its sideways grind in recent weeks. Second, CAT is trading along a major support level (blue line) which it has managed to previously rebound from as seen in 2012 and 2013. We feel this is a lucrative buying opportunity for anyone eager to get long in anticipation of a rebound over the coming months, while still being able to closely monitor their downside risk.
Technically speaking, CAT is still in a downtrend which is why we would recommend utilizing a tight stop-loss around $80 a share in case selling pressures return.
Disclosure: No positions at time of writing.