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5 Big Stock Trades Signaling ‘Buy’

“Technical trading” is a blanket term that covers a wide variety of approaches to determining when a stock is sending buy or sell signals. In his article “5 Big Stock Trades Signaling ‘Buy,” Jonas Elmerraji identifies five big-cap names that he feels may be poised for more gains, based on technical buy signals.

“Technicals are a study of the market itself, Elmerraji stated in regular weekly article preamble. “Since the market is ultimately the only mechanism that determines a stock’s price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street’s biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.”

After taking into account the market’s tremendous surge during the first part of 2013, Elmerraji believes that the VIX Volatility Index, which has been sitting below 13 at last count, “scraping against the bottom of its historic range,” may actually be signaling more imminent market gains. “A near-term low in the VIX isn’t necessarily a bad thing…Injecting volatility into a bull market is a recipe for bigger gains, not a crash. That’s something to consider the next time someone points to a low VIX reading as a contrarian sell signal for stocks.”

The first big cap names on his list is Amgen (AMGN). Noting that the company’s shares have not participated in the S &P 500’s recent rise, but points to a bullish technical setup. “Amgen is currently forming an ascending triangle pattern, a technical setup that’s formed by a horizontal resistance level to the upside and uptrending support sitting right below shares. Essentially, as AMGN bounces in between those two technical price levels, it’s getting squeezed closer and closer to a breakout above resistance at $90. When the breakout happens, we’ve got a buy signal for this stock.”

The other four stocks making his list are Actavis (ACT), whose chart according to the author, is setting up just like Amgen’s. He also likes the breakout potential for shares of Microsoft (MSFT), LKQ Corp. (LKQ), and Equitable Resources (EQT).