As we head towards the end of another trading year, I thought it was time to review our portfolio of stocks that I suggested back in September, as potential longer term buy and hold opportunities. Over the last few weeks the principle indices have all continued to extend recent bullish momentum, and the question of course is whether this is likely to continue into the New Year, and as such how stocks and shares are likely to perform in 2011. My own view is that next year could be an excellent one for equities, and so with this in mind, let’s take a look at the stocks selected to far, and whether it is time to sell, or continue to hold for the longer term.
El Paso ( EP) – buy at $13.11 – El Paso closed on Friday at $13.20 having hit a high of $14.08 earlier in the month, but in the last two weeks the stock has moved lower, breaking below all three short term moving averages and running into potential support at the current price level which extends down to 13.00. It is also interesting to note that we saw abnormally high volume on the 3rd November which preceded the move higher over the following weeks, but to date there has not been any subsequent selling by the market makers. So my view at present is to continue to hold this stock, and to wait for any test of the 200 day moving average which currently sits at 12.25. To the upside, the key level has now been established in the $14.00 price level, and any breach here will signal a longer term move higher.
Ameren Corp ( AEE ) – buy at $29.18 – since achieving a high of $29.81 on the 15th November, the stock has been on the slide and in the last few days has broken below all three short term moving averages, closing on Friday at $28.40. However, on both Thursday and Friday last week, the daily price action produced a hammer candle on each occasion, suggesting that we are likely to see a bounce higher for the stock in the short term, and provided we see a break and hold above the 40 day moving average which now sits at the $29 price level, then this will give us a strong signal that the bullish momentum is set to continue for the stock in due course, so my recommendation is to continue to hold this one.
Helmerich & Payne (HP) – buy ay $42.00 – one of our star performers which has continued to rise again this week, closing on Friday at $48.74 and holding above all four moving averages. This is now well above my initial target for the stock of $46.60, and looking at the longer term chart we are now touching a previous high at $49.13, last seen in January 2010. My suggestion is therefore to wait, and if this is breached then continue to hold as the bull trend is likely to extend further, but move up your stop loss to lock in current profits somewhere below the last test lower in the $46. 45 region.
General Electric (GE) – buy at $16.69 – another solid performer closing on Friday at $17.70 and holding well above all four moving averages. The 9 day MA in particular is continuing to provide excellent support to the move higher, and with the 14 day moving average also pointing sharply higher this continues to be a hold. Having broken through resistance at $17.40, we can now look towards a target in the $20 price area in the next few months.
Alcoa (AA) – buy at $11.75 – this is another of our start performers, closing on Friday at $14.56 and breaking above short term resistance in the $14.50 area as a result. The bullish trend remains firmly in place for the stock, as we hold above all four moving averages, and provided we see a breach of potential resistance in the $15.14 region, then this will add a further platform of support to the move higher, with a potential move to the next level at $17.60 and beyond in due course, so continue to hold this one.
Harley Davidson (HOG) – buy at $29.42 – as a motor bike fan, I am delighted at the strong trend for the stock, and this is another of our star performers, having closed on Friday at $34.50, and now looking set to climb further. Volume on the stock increased steadily along with the price action, so strong signals that the bull trend is likely to continue for some time to come, so hold and move up your stop loss to lock in some profit. The next target is the high of April at $36.13, and if this is breached then we could see the stock breakout and move strongly higher in the longer term, so continue to hold this one well into next year.
Metropcs Communications (PCS) – buy at $10.93 – a steady and sustained move higher with the stock closing on Friday at $12.08, and just breaking below the short term 9 and 14 day moving averages towards the end of the week. However, immediately below we have an area of potential support in place, and this should provide a platform in any further pull back. It was intersting to note on Friday that volume was above average, and with a narrow spread down candle, suggests that the market makers are buying, and therefore we should continue to hold this one for the time being. Any break and hold above the $13 price level will signal a continuation of the longer term bull rally.
Citigroup (C) – buy at $4.05 – a solid performance from our only banking stock, which closed on Friday at $4.70 breaking and holding above all four moving averages on the day, and ending the week in positive tone. This stock remains a hold for the longer term, and any break and hold above the $4.85 high of last week will give us a firm signal that the stock is set to continue higher. The key resistance area is now waiting in the $5.05 area and once clear, then this should provide a solid platform of support for a further leg up in the rally.
I hope you find the analysis useful, and if you enjoyed reading my post then a facebook ‘like’ is always very much appreciated – Anna