2 Commodity Stocks to Buy on the Dip: APC and BHP

Major equity benchmarks continue to rise into uncharted territory as optimism levels remain elevated following the latest “No Taper” decision from the Fed coupled with expectations that monetary policy will remain accommodative for the foreseeable future. Developments in the Middle East have further helped to bolster stocks higher, and crude oil lower, as investors expressed optimism following overnight news of the deal between the United States and five other superpowers that would freeze advancement of Iran’s nuclear program [for more commodity futures news and analysis subscribe to our free newsletter].

With no clear headwinds in sight on Wall Street until the debt-ceiling debate is reopened on January 15, 2014, many are anticipating a strong year-end “Santa Claus” rally. 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 $100 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].

Anadarko Petroleum (APC)

Consider APC’s one-year daily performance chart below.


Click to Enlarge

APC has endured a healthy correction in the first half of November that appears to be coming to an end judging by the stock’s ability to hold above $90 a share over the last two weeks. The stock has been trending steadily higher since it last pulled back to its 200-day moving average at the start of this year; since then, APC has managed to post higher-highs along an upward sloping support line (blue) while holding above its 200-day moving average. This stock should be avoided if it breaks below $87.50 a share seeing as how that was the last major support level for APC.

BHP Billiton Ltd. (BHP)

Consider BHP’s one-year daily performance chart below.


Click to Enlarge

BHP has endured a downtrend for most of 2013, although recent price action suggests that bullish momentum could be turning the bearish tide around. This stock has managed to break above its 200-day moving average, and it will look to hold above this level over the coming weeks; more importantly, notice how BHP has managed to do so all the while trading along an upward-sloping support line (blue), which suggests that medium- and longer-term buyers have started to flock back to this beat down miner. This stock should be avoided if it gaps below $68 a share since that was the last major support level for BHP.

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Disclosure: No positions at time of writing

This entry was posted in Energy, Industrial Metals, Trading and tagged , . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

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