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Foster Wheeler AG (FWLT) is a $2.52 billion dollar heavy construction company that is based in Switzerland. Recent data shows that they have $709 million in cash with only $152 million in debt. The chart formation for FWLT could also be called a reverse H&S, but it is not as clear.

• FWLT dropped below the 20-week EMA and the 38.2% Fibonacci support in November as it had a low of $20.88.


• There is year-long resistance, line a, at $24.41-$24.73. A move above this level should signal a rally to the 50% Fibonacci retracement resistance at $27.51.


• This resistance is calculated from the 2011 high at $39.75, but in early 2008 FWLT had a high of $85.65.


• The relative performance broke its weekly downtrend, line b, in August and has now turned up from its WMA.


• The weekly on-balance volume (OBV) looks much stronger as it moved above key resistance at line c, in September.


• This completed a major bottom formation and the OBV held well above its WMA on the recent correction.


• There is first support at $23 with stronger in the $22.00-$22.40 area.

What it Means: The positive weekly analysis of the industrial sector and the bullish action of construction & engineering industry group suggests that they could be market leaders well into 2013.

These two stocks also appear to have completed significant bottom formations, but I would be a patient, smart buyer and wait for a pullback to buy.

How to Profit: For Granite Construction Inc. (GVA), go 50% long at $30.44 and 50% long at $30.06, with a stop at $28.43 (risk of approx. 6%).

For Foster Wheeler AG (FWLT), go 50% long at $22.92 and 50% long at $22.46, with a stop at $21.44 (risk of approx. 5.5%).