Major U.S. equity indexes have been giving up ground since last Friday following the massive rally to new highs in light of the Federal Reserve’s surprise announcement to hold off on tapering. With stimulus fears off investors’ minds, for now at least, many are looking ahead to what may inspire the long-overdue correction that bears keep dreaming about; the debt ceiling debate in Congress coupled with looming uncertainty over the new Fed chairman appointment can certainly bring on clouds of uncertainty [for more commodity futures news and analysis subscribe to our free newsletter].
Amid the brief pause in the ongoing rally on Wall Street, bargain shoppers are 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” 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 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].
Cabot Oil & Gas (COG)
Consider COG’s one-year daily performance chart below.
Click to Enlarge
This stock has been trading above its 200-day moving average (yellow line) consistently along a rising support level (blue line) since the end of last year. COG has been able to rebound off its rising support line after each pullback, and as such, we feel that traders can favorably position themselves at current levels in anticipation of another rebound; in case of a reversal, we advise setting a tight stop loss at or below $36 a share.
Southwestern Energy Company (SWN)
Consider SWN’s one-year daily performance chart below.
Click to Enlarge
This stock hasn’t staged a massive rally, but it has been climbing higher along a steadily rising support level; notice how SWN has managed to rebound off its 200-day moving average ( yellow line) on several occasions this year. With SWN currently trading near support, we feel that jumping into a long position here is attractive; traders can reap the benefits of a rally in the coming days while still closely managing their downside risk with a tight stop loss.
Spectra Energy (SE)
Consider SE’s one-year daily performance chart below.
Click to Enlarge
This stock appears to be climbing higher along a fairly steeply sloping support level (blue line) since the start of 2013. Judging by SE’s ability to hold support above $33 a share over the past few weeks, we feel that this stock is poised to remain on an upward trajectory. In case the uptrend reverses, traders should utilize a stop loss at or below recent support around $33 a share.
Don’t forget to subscribe to our free daily commodity investing newsletter and follow us on Twitter @CommodityHQ.
Disclosure: No positions at time of writing
