2 Commodity Stocks To Buy On The Dip: APA, HAL

Uncertainty may have been a central theme on Wall Street all year, but when all was said and done, it was undeniable that the bulls prevailed on the equity front. Bears, however, ripped through commodity markets across the board. With taper fears now in the history books and a federal budget deal on the table, it’s no wonder that many are anticipating for the stock market bull to continue its run higher into 2014 [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 potentially reopened mid-January 2014, many are positioning themselves for further gains. 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].

Apache Corp (APA)

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


Click to Enlarge

APA broke above its 200-day moving average (yellow line) just a few months ago, after being stuck in a downtrend for most of 2013. This stock appears to be slowly but surely regaining bullish momentum as evidenced by its ability to keep rising along upward-slopping support (blue line). APA’s recent correction was quite steep, but not worrisome for long-term investors seeing as how the stock managed to hold above $85 a share, a key level that it previously rebounded off in early October. Bullish momentum should bolster this stock higher in the coming weeks, while a break below $85 would call for reassessment of the ongoing uptrend.

Halliburton Company (HAL)

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


Click to Enlarge

HAL has been trading higher within a crudely defined upward-slopping channel (blue lines) for the past year. This stock has managed to fairly consistently rebound off its lower-support line after nearing it, while also correcting lower after bumping against upper-resistance. Given that HAL is now trading near the lower-half of its range, we feel that entering into a long position at current levels is an enticing buy. Investors can favorably position themselves in anticipation of another rebound, while still being able to closely manage their downside risk with a tight stop-loss at or above $48 a share.

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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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