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Four Must-See Charts of the Day - 9503 views
By Stockpickr Staff
Posted on March 10, 2009
Despite the overall weakness in the markets on Monday, the banking sector experienced some surprising strength, with the regional banks advancing 5.9% and the money center banks rising 3.3%. This type of action in the banks is very significant, as many technicians believe that true stock market rallies need to be driven by positive action in the banks.
Investors could be starting to find some unbelievable bargains, considering the KBW Bank Index reached a record low on Friday of 17.75. Even bad news like dividend cuts at Capital One (COF) and Wells Fargo (WFC) weren’t enough to take those stocks down.
Some other sectors that bucked the market downturn on Monday were heavy construction, which jumped 3.8%, REIT healthcare facilities, which rose 3.3% and healthcare information, which added 3.16%.
The market seems to be taking President Obama’s spending plans seriously as demonstrated by the bullish action in the sectors that will directly benefit.
With this in mind, let’s look at two charts from these sectors, along with two bank charts that look technically poised for big moves.
1. Foster Wheeler
One company that could benefit big from infrastructure spending in China and the U.S. is Foster Wheeler (FWLT). Shares of Foster Wheeler have been very unfriendly to investors over the past 52 weeks, as the stock has dropped from $79.97 a share to a low of $12.73. Now the stock looks to be putting in a bottom as the shares have found some support around $13.86 to $12.73 a share. Helping to support this bottom theory is some very heavy volume in last few trading sessions that has clocked in well above average trading activity. Last Friday, the stock traded 11.4 million shares versus the average volume of around 5 million shares, as FWLT finished to the upside. Monday, the stock jumped another 4.8% on 6.2 million shares traded. If a new uptrend is starting in FWLT, the stock could be well on its way back to the 50-day moving average of $21.16.
Some other heavy construction charts worth looking at are McDermott International and Fluor (FLR).
2. Fifth Third Bancorp
Regional banks were extremely strong on Monday in a down market, which is can be an indicator of relative strength. One name that looks ready to move higher is Fifth Third Bancorp (FITB). Shares of Fifth Third have found some support around the area of $1.27 a share. Prior to finding this support, the stock traded up from $1.01 a share to $2.75 on huge volume. The stock has now pulled back to the previous support level ($1.27 area) on much lighter volume. This could indicate that the stock is under accumulation and not distribution, as volume tapers off on the selloffs. Shares of Fifth Third could be well on their way back to $2.75 (or higher) if these bullish patterns persist.
If the regional bank strength on Monday was real, you might also want to look at US Bancorp (USB) and Regions Financial (RF) for the potential of huge gains.
3. SunTrust Banks
The regional banks weren’t the only financials to rip higher on Monday. Money center banks were also heavily in play, as investors looked to scoop up bargains in the beaten-up space. One name that has a very compelling chart is SunTrust Banks (STI). SunTrust has found some support at $8.76 a share and the volume by price indicator could be indicating that the bears and bulls are in the midst of a major battle for control of the stock at current levels. Look for this stock to trade back up to $14 a share if the bulls take control. If it can crack through that level it could be ready to move much higher.
Some other money center banks that could be set to explode to the upside include Bank of America (BAC) and Wells Fargo (WFC). It’s worth noting that Barron’s mentioned BAC positively this weekend, saying the company has a good chance of passing regulatory muster. Don’t ignore the action in these names.
4. Allscripts-Misys Healthcare Solutions
If President Obama gets his wish and he’s successful in converting medical records to an electronic format, then a company like Allscripts-Misys Healthcare Solutions (MDRX) could benefit in a big way.
Allscripts is a huge player in the business of providing software solutions that help physicans and healthcare providers manage medical records online. Looking at the chart below, you can see that shares of Allscripts have been trading in a channel between around $10.20 a share to around $7.60. The stock now looks ready to head back to to $10 after finding support at the bottom range of the chanel. If the stock can finally break through $10.20 it could be set to rip much higher.
Another name in the space to consider is Cerner (CERN). Over the weekend, Barron’s wrote a bullish take on Cerner and included the stock in its list of 10 great stocks to stash away for five years or longer.
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