Investing in Base Pattern Breakouts | Value Stocks in 2012

Top Value Stocks - Base Pattern Breakouts

The Momentum Rider investor series continues as we take a look at the coming week's action and also more areas to look for to find top value stocks. This week is going to be focused on value stocks with basing pattern breakouts. Long consolidation breakouts can be very good and safe trades as the price support is well established. Once the momentum moves out of the base to the upside, any remaining shorts will need to cover and the move can be fast and very powerful. These stocks have good valuations and should see substantial moves up as the world economies recover and they can be viewed as both good trades and good investments.

There were a number of positive reports today that helped the markets recover from a several day slide. The S&P 500 did touch our first support of 1300 on Monday as we discussed in Sunday's newsletter and then bounced with dip buyers. Today reached a high of 1330 before retracing at the end of the day to finish at 1324. It was a day that was filled with better than expected manufacturing data out of Germany, India, U.S., and China. That was important to keep confidence up after a very good January.

It looks like China is still headed for a softer landing than many have predicted which is critical for commodities and the rest of the markets. The day also saw more private sector job creation, decent home sales, good earnings from Whirlpool, and a Facebook IPO announcement. All of this added up to more buying and the continued "melt up" higher. I use "melt up" versus a strong move because the volume is extremely light and most of the investment community is still very guarded.

The trend is still up and staying above the 20 SMA and the DJIA is close to its 2011 highs. Until the trend breaks below the 20 SMA, it is best to stay long. The last 2 weeks have been primarily a consolidation as the S&P 500 was at 1314 on January 19. The overbought indicators have backed off some but are still stretched.

My biggest concern is that the bearish rising wedge in the S&P 500 is still intact. It needs to be carefully watched at these elevated price levels and after such a strong move up without a meaningful pullback. At this point, everyone seems to believe Greece will get a finalized agreement because it is priced into the market.

Using the Power Stocks Table:
(1) Risk: Conservative (Cons); Moderate (Mod); Aggressive (Aggr); Speculative (Spec)
(2) Stop: Typically use a 3 to 4% closing stop below the entry price
(3) Trailing Stops: Use the 10 EMA (Swing) or 20 SMA (Short Term Trader) for protecting gains once above it; SMA = Daily Simple Moving Avg; EMA = Daily Exponential Moving Avg.

Value Stocks to Buy for 2012 - Base Breakouts
Today's stock picks will be value stocks with technical base breakouts. These are typically fairly safe long entries once they get some momentum up out of a long consolidation. The longer the consolidation, the stronger the up move will be.

Top Base Pattern Breakouts - Value  Stocks:

Investor Notes:
Investors should look at our recently posted blogs on top value stocks in energy and precious metal mining stocks. Both areas look ready to rebound after going sideways or finishing up long downtrends. Many of the precious metal mining stocks had big reversal moves recently. The top gold and silver stocks and ETFs were in a blog on our website. (Click here to read it).

Stay tuned for some blogs to come on China's market and their top stocks. Also, look for a very important blog post on US Treasuries this week. A very safe investment will be revealed and it is not what you think.

Natural Gas prices came back down to retest the previous bottom for what should be a double bottom basing pattern. CHK has very strong support at $20.00 going all the way back to 2010 and it should hold that level.

Check out our newest FREE promotional offer called the MR Market Crusher Pack for 2012 (click link). It includes 5 very valuable investor products worth $600 to get you started with a bang in 2012 for your retirement account.

Another exciting pack for our subscribers and new customers is our MR Power Income Pack for 2012 (click link). It has 5 high income and retirement products worth $400 with some unbelievable dividend stock picks with both value and good growth.

To find out more about why our subscription services continue to crush the market since we started in 2004, go to www.momentumrider.com.

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Good luck in your trading and investing,

Keith Hugenberg

CEO Jalexa Trading Consultants, LLC

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Its Time To Buy Energy Stocks | Oil Service and Equipment Companies

Energy Stocks - Oil and Gas Service and Equipment Stocks

Many energy stocks are trading at very attractive valuations as this article is written. MR believes this is the right time to start scaling into these stocks and ETFs if you haven't done so already.  And, even though these stocks could still pull back from these levels, the patient investor will be rewarded. Investors should take advantage of the low prices in our recommended stocks list. Furthermore, this article details the first four strong reasons that energy stocks and energy ETFs will be good long term investments beyond 2012. This is part 1 of a 2 part blog with four more reasons and more energy stocks to follow.

Crude oil, natural gas, coal, and refined oil products, like unleaded gas, will continue to be used extensively in the future. And while there currently is a significant large storage inventory and oversupply of all of these energy sources in today’s economic environment, the demand and supply curve is starting to shift as the world recovers. The time to invest is before that coming big demand shift happens quickly and everyone sees the recovery occurring.

Crude oil and coal are still the work horses of the energy world and that won’t change anytime soon. Furthermore, the higher demand that will be placed on these energy sources coupled with the explosive driving middle class in China and other emerging markets will put huge pressures on refined liquid gas products. We all know that inflation is coming in the next few years if not sooner.
Even during the 1970’s and early 1980’s when inflation was raging and the general stock market was falling, energy related stocks made strong gains.

This article will discuss numerous reasons to invest money in energy stocks and energy ETFs and details support for upward price pressures going forward for years to come.

Reason #1: Oil, coal, natural gas, and unleaded gas are cheap at their current price levels as measured on an inflation adjusted basis from their previous historic peaks.

While oil is not cheap relative to the overall historic levels ($100), it is still cheap compared to the recent $126/barrel level in 2008 and also compared to the $108 per barrel in the late 1970’s. Coal is selling now at 2005 and 2006 levels and over 50% less than the peak in 2008. Natural gas is selling at very cheap levels (< $2.50 per thousand cubic ft) even after the recent bounce this week.

Reason #2: The oil supply is disappearing much faster than new sources are being found and some experts have argued the “peak energy” story for years now.

It is true that the probability of finding a large undiscovered oil source is probably close to zero at this point. In addition, the recent trouble with deep water and offshore oil rigs in the ocean obviously doesn’t help the situation. The emerging market middle class growth is still strong and the demand placed on energy from that explosive growth will stay high. China’s and India’s growth in automobile purchases alone is daunting for oil and refined products to keep up with. This means higher energy prices are coming and investment opportunities in top energy stocks, especially  the oil service and equipment stocks, makes sense.

Reason #3:  The oil service and equipment ETF chart is a good example of a consolidation and basing pattern. It has been gaining momentum in 2012 and it broke a significant 7 month downtrend line. Now the price action is moving up to breakout above the 500 SMA and the 200 SMAs. This is an opportunity to scale into some stocks in this sector before a breakout occurs.



Reason #4: Inflation will become a huge issue in the next few years and beyond. This will put significant upside pressure on oil and all commodities as it did in the 1970’s and early 1980’s. The recent Fed stance of keeping interest rates very low through 2014 will eventually spark inflation.
This reason alone supports a strong move up on energy and therefore a positive environment for oil service and equipment stocks. Even though the stock market was in a bearish trend in the 1970’s and early 1980’s, energy related stocks still showed significant gains. Many of the oil and gas equipment stocks even showed gains of several hundred percent.

The following chart lists our favorite Oil and Gas Service and Equipment Stocks:



Take partial positions after the next pullback in the market which should happen in the next few days and probably some next week. Add to your position on drops to build out your investment position. Use any breakout above the 500 SMA or 200 SMA for trailing stops. Our top picks and their risk level are highlighted in yellow.

To get our weekly HOT stock and ETF picks and detailed market commentary automatically sent to your email, enter your name and email address in the form on this page (Click here)

Check out our newest FREE promotional offer called the MR Market Crusher Pack for 2012 (click link). It includes 5 very valuable investor products worth $600 to get you started with a bang in 2012 for your retirement account.

Another exciting pack for our subscribers and new customers is our MR Power Income Pack for 2012 (click link). It has 5 high income and retirement products worth $400 with some unbelievable dividend stock picks with both value and good growth.