The market always makes sense when you look back. It has been an extremely volatile period and a large number of stocks have been hammered beyond recognition but even in this market, some stocks have done extremely well. Here are a few large-cap stocks (the stocks with a market cap of more than $10 billion) that have done well. The interesting part is they all share similar characteristics. The article will help you understand what drives stock price performance and the stocks that fit that criterion right now.
Long Occidental Petroleum: 1. Higher Crude Prices + 2. Breakout
Occidental Petroleum OXY stock broke out above 35 in 2H Jan 2022 and the stock consolidated around 38 levels before taking off. The long trade at 38 is now up 50%. It was an obvious trade.
It’s not just Occidental Petroleum but also stocks like Exxon Mobil and Chevron that seem to have done well. The war accelerated interest in Chevron
Long Barrick Gold GOLD – Good Earnings + Breakout above 200 dma
Barrick Gold Gold mining company was struggling below 200 dma but then the stock broke out as volatility spiked and then the momentum accelerated with earnings result. The stock gave a buy signal at 21 around early Feb and now a month later – the stock is up 24%
It’s not only Barrick Gold, even Newmont NEM Gold mining play made a similar move
Long CLF ~ War + Large Candle move
Cleveland Steel became a buy candidate when the market acknowledged that economic sanctions on Russia will lead to higher prices for Steel. CLF made a large candle move and the stock became a buy at 20 levels. The stock ran away to 26 – the resistance level and is selling off. It was a 30% move but is the move over? I don’t think so. One should continue to ride the stock.
Long Halliburton HAL – Breakout + Higher Crude Oil prices
HAL stock broke out above resistance in Jan and then pulled back only to spike with a large candle move. The stock became a buy at 28 and now 1.5 months later the stock is at 38.5, up 37%
Long Mosaic MOS ~ Large Candle Breakout + Fertilizer Play
Fertilizer companies witnessed strong demand and a firm pricing environment. MOS made a large candle breakout in Jan and then consolidated for a month around 43 before taking off. The stock is now up 40%.
What’s common in above all the stocks?
There was a strong fundamental reason and corresponding price action move. They all broke out or made large candle moves. Such stocks have potential to surprise on the upside. Here are few large-cap stocks that fit this criterion.
WATCH LIST – Looking to buy on declines
Should we buy Freeport-McMonRan FCX?
Price Action and Fundamentals say YES. Inflation and Geopolitical conflict will keep metal prices high and this will benefit a copper commodity company FCX. There has been a breakout on the weekly chart and daily chart above 44. The stock is trading near 48, and one can look to add on any declines near 46
Kroger KR – Buy on declines
I like when stocks make a runaway move post-earnings. Kroger has always been a defensive name and the stock does not have a history of making strong momentum moves but the chart right now suggests that might be about to change. High inflation means less eating out and cooking at home. Kroger’s earnings last quarter seem to have confirmed the trend and no wonder the stock has surged.
The stock is a buy on declines near 54.
When it comes to Large-cap investing, the macro economics theme matters a lot. For example – Russia Ukraine war has accelerated investor interest in Oil stocks, Gold, Agri chemical stocks, Steel, and other commodity stocks. One can see new interest in Solar stocks. In large-cap there are two names:
- Enphase Energy ENPH +11%
- SolarEdge Tech SEDG +9.7%
Is this a buying opportunity? I don’t know but this is one sector one should watch
Higher Energy Prices are also driving interest in Renewable Utilities. No wonder First Energy FE broke out. The current pullback is a buying opportunity. I will look to add the stock near 43
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
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