Should the bulls follow-through on Monday’s promising close, I am looking at the following chemical plays with sound technical setups.
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Plum Creek Timber Company. Inc., is not only a REIT offering a 3.77% yield, but it also has direct exposure to the suddenly surging materials sector. With plenty of traders noting the bull run in Weyerhaeuser Company of late, PCL is more of a sleeper breakout candidate, as far as non-metal materials plays go.
As you can see on the weekly timeframe, below, pressure is building towards a multi-year breakout above $45, a well-defined level of resistance. The bigger the base, the higher in space; And with a breakout through this level out of the weekly bull flag (light blue lines) I expect all-time highs from 2008 at $56.90 to be tested.
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With energy and materials leading the charge higher, it is instructive to consider the still-consolidating oil services in the OIH ETF. They have indeed been quiet for quite some time now, but could easily wake up with the rotations we have seen into energy.
The first chart, below, is a weekly view of the OIH. Note the range that has been present for several years. A move through $45 would be an excellent start for the bulls. Should that materialize, you are likely to see stocks like NOV (second chart, below) break out of its weekly bull flag to all-time highs above $90–A well-defined resistance level that, if breached, is highly likely to lead to a sustained breakout.
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Here are three under the radar lodging plays to watch, going forward.
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Monday’s rally may very well have been the start of a fresh leg higher disguised as a mere overdue bounce. The prevailing sentiment seems to be that the rally was not particularly convincing on several fronts, though that may precisely be part of Mr. Market’s clever plan to frustrate the majority as it confirms higher.
Instead of picking short-term bottoms, though, the larger point of staying focused on the intermediate-term uptrend that remains intact on the major averages has been the crux of my analysis of late. My goal is to be prepared and properly positioned to strike on the long side if the rally continues higher. If more time is needed to correct/consolidate, then patience continues to be the focal point for swing traders.
I have noticed quite a few charts of leaders from the summer that have had time to base in a bullish manner, namely KORS. In addition, other retail plays, such as PLCE and PVH, are charts of interest on further strength.
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While quite a few retail plays correct or need to reset their charts after recent corrections, keep an eye on BONT and WSM. We have been observing them for a while now, and they continue to perform well.
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