Stock Picks: Buy Apache Corporation and Avalon Communities

The SPX is showing signs that it is running out of steam as it dropped 13.7 points yesterday, January 29, when it opened at 2,867.23 and closed at 2,853.53. While the dip in points doesn’t appear significant, the plunge in RSI is concerning. It went from 86.6866 down to 76.8894 in one day. The 10-point pull back might indicate that the index is ripe for profit taking, especially since it is still in extreme overbought territory.  

As we continue to recommend to stay on the defensive, let’s look at stocks that far from their high and near their support.

AEP – American Electric Power Incorporated

American Electric Power Incorporated (AEP) is a power utility holding company that serves 11 states: Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia, and West Virginia. This investor-owned company, originally formed in 1906 as the American Gas and Electric Company (AG&E), provides electric services on an integrated basis with other segments that include Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing.

AEP generated its five-year high of 78.07 in December 2017. At that point, however, the stock was near overbought territory, and bears took the opportunity to dump their positions. What followed next was a six-week correction that saw the market tumble down to 67.11 on January 16, 2018. In about a month, the stock shed close to 15% of its value. Those who sold during this corrective period lost the chance to recoup their investments once the stock resumes its ascent.

Technical analysis show that the stock is establishing support at 67. The dramatic increase in volume when AEP dropped to this level shows that bulls are ready to defend 67. While the stock recently bounced to 69.8 on January 25, it appears that 67 is bound for a retest. If bulls successfully defend this level again, then it might signal the end of the correction.   

The strategy is to buy as close to 67 as soon as the stock successfully retests this support. If this level is defended, we might see the stock climb up to 78 in three months.

Daily AEP Chart

Weekly AEP Chart

As of January 29, the American Electric Power Incorporated stock closed at 67.90.

Summary of Strategy

Buy: As close to 67 as possible

Target: 76

Stop: A close below 65 negates this trade call

FTI – TechnipFMC

TechnipFMC (FTI) is a company that specializes in projects, technologies, systems, and services for oil and gas production and transformation. They are the current global experts in innovation and design for subsea (umbilicals, flexibles) onshore/offshore (fixed and floating facilities), and surface (drilling, flow-treatment services) solutions. Among their subsidiaries are FMC Technologies, Technip, Flexi France SAS, and DUCO INC.

FTI went in a downtrend when it generated a lower high at 57.87 in November 2014. What ensued was a series of lower lows and lower highs as the stock broke one support level after another. It finally found a bottom at 22.30 in February 2016, and it established support at 25 one month later. The stock briefly pierced resistance of 35 in November 2016. However, those who bought at the 25 support level used the rally to take profits.

While FTI retreated to 25 again in October 2017, technical analysis show that it is forming a large double bottom pattern that could jumpstart a bull run. But first, it must take out resistance at 35 with conviction. This means to volume needs to be over 20 million shares in the daily chart to have a good chance of claiming 35. Those who bought the retest at 25 are likely to take profits at 35. The breakout needs a fresh batch of buyers to absorb the selling pressure.  

The strategy is to buy the breakout at 35 with the prescribed volume. Once breakout is confirmed, we might see the stock reach our target of 45 three months later.

Weekly FTI Chart

Monthly FTI Chart

As of January 29, the TechnipFMC stock closed at 33.08.

Summary of Strategy

Buy: breakout at 35 with 20 million volume

Target: 45

Stop: A close below 22 invalidates this trade call.

Featured image courtesy of Shutterstock.

The post Stock Picks: Buy Apache Corporation and Avalon Communities appeared first on Crypto Currency Online.

source https://cryptocurrencyonline.co/stock-picks-buy-apache-corporation-and-avalon-communities/