There’s no denying the last few weeks have been very bullish for stocks with major indices recording multi-year highs, and that’s why MoneyShow’s Tom Aspray is taking a technical look at several stocks that will look attractive when the inevitable pullback occurs.
The weaker than expected Pending Home Sales hit the market in early trading but once again the selling was well absorbed and the close was mixed. While the Spyder Trust (SPY) was down just a fraction, the Philadelphia Housing Sector Index (HGX) was down 1.7%. Bargain hunters in Apple Inc. (AAPL) pushed the Nasdaq 100 into positive territory for a change.
We get more data on housing today with the S&P Case-Shiller Housing Price Index and also a new reading on the health of the consumer with the latest data on consumer sentiment. The stock index futures are down in early trading and a close below Monday’s low could trigger the first meaningful correction for the month.
So what stocks should you consider when the market corrects? This week’s cover story in Barron’s The Next Boom makes the case for the resurgence of the US manufacturing sector. In particular they have picked eight stocks that they expect to benefit in the “gas fueled manufacturing upswing.”
The article provides a very good analysis of the fundamental case for each of the companies, and I would suggest you pick up a copy if you are not already a subscriber. I took a technical look at all eight stocks and isolated those companies that I think look the best from a technical standpoint. These stocks should be considered for purchase on a significant pullback.
Chart Analysis: Calpine Corp. (CPN) is a $9 billion dollar producer of gas powered electricity that made a new 52-week high on Monday as it surpassed its quarterly R1 resistance at $19.19.
LyondellBasel Industries NV (LYB) is a specialty chemical company whose stock price has skyrocketed since it emerged from bankruptcy in early 2010. On Monday it closed below the prior three-day lows, which may be the start of a correction.
NEXT PAGE: 2 More Up-and-Coming Stocks