In a down or uncertain market, technical analysis tends to be even more important than usual. Only pockets of strength tend to exist in a down market. There is always a bullish stock in a bad market, the problem is finding them. These stocks with strong technical strength tend to show strong bullish behavior when the bull market resumes, assuming nothing negative has changed the fundamentals or thesis in the stock, of course. Here are a few stocks on my watchlist showing strong technical indicators even when the market uncertainty is bashing many other stocks.
Sirius XM (SIRI)
SIRI has been in a fairly tight trading range during this market uncertainty and has shown strength in the PPS by not falling far. When viewing the 3-month chart, you can see the A/D line in an uptrend showing that accumulation is increasing. The OBV line is also in an uptrend further confirming the initial premise. The CMF (21) is showing very strong buying strength rather than selling pressure which is a very bullish sign. The RSI is closer to oversold than overbought range which is positive as this means these are possibly good buying points for a future run. I try to have my buy points under 40 (and always buy in increments) or as close to 40 as possible. I try to hold my position between 40 and 60 or sometimes 70 than looking to sell when it’s above that. The concern is the lack of volume we see. Lack of volume can create a down trending effect. If the market turns around sometime soon, we could see higher volume resume bringing SIRI up significantly higher. Since SIRI recently raised guidance, this makes me more bullish.
Kodiak Oil (KOG)
KOG has been beaten down by the free fall in crude oil prices. This is one reason why I consider KOG a great buy under $3.50 and have been buying in increments the farther below $3.50 it falls. Many, like myself, predict crude oil will only see these pressured levels temporarily and will rebound shortly. This is why I am currently making KOG my largest position in my portfolio. Oil, for now, is my favorite play that I feel will pay big rewards soon. For the sake of time, I will not go into details about why I believe crude will bounce and will let you decide based on your own homework and having discussions in our chat room.
The technical’s are strong in KOG as well which is another reason KOG is the oil play of choice for me. Even when the PPS falls, the A/D line continues an uptrend when viewing the 6-month chart. The CMF (21) is very strong with only brief downtrends on the OBV line that bounce back relatively quickly. The volume is still strong and when crude oil bounces back, I feel we will see KOG reach new 52-week highs. This should be a fantastic quarter for KOG as it predicts very high growth.
Synovus Financial (SNV)
SNV is a bit trickier as I am not too bullish on financials at the moment but the technical’s prove otherwise for now. The volume is normal and the A/D line is on an uptrend. The CMF (21) is showing strong buying with the RSI nearing oversold territory indicating this could be favorable buy points. The biggest concern here is what happens to the financial sector in general. If the financial sector, as a whole, tanks, SNV is likely to break technical strength and fall as well. This differs from my view on the oil sector as I am very bullish that oil will bounce back soon and help bring the sector up.
As always, do your own homework to see if you agree. Join our chat community and bring questions or research to the table. It is always beneficial to have many viewpoints. See you in the morning. Good luck out there.
At the time of publication, Kudrna was Long KOG and SIRI but positions may change at any time.
