5 Big Stocks to Trade for Gains This Week
The cartoonist's advice is sort of the simplified version of Nassim Nicholas Taleb's Black Swan -- and it's something worth thinking about as the so-called "Fiscal Cliff" draws near.
Last year, the Debt Ceiling debacle threw a wrench into the markets, but this year, the cliff is starting to look more like a fiscal curb by comparison -- investors had priced in a resolution on Capitol Hill from get-go. Of course, it doesn't hurt that most of Congress is populated by Dilbert characters anyway. That's part of why stocks are trading so differently now than they were back when stocks sat a month away from Uncle Sam running out of cash.
Instead, it's a lot easier to match up a chart of price action right now with the rally that Mr. Market gave us from the end of 2011 through the first quarter of this year. So, with the S&P 500 coming off a correction, there are ample buying opportunities right now in stocks.
That's why we're taking a technical look at five big names that are tradable this week.
If you're new to technical analysis , here's the executive summary.
Technicals are a study of the market itself. 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.
Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at the charts of five high-volume stocks to trade for gains .
Royal Bank of Scotland Group
First up is Edinburgh-based bank Royal Bank of Scotland Group (RBS) . Financial stocks have been showing surprising strength over the last several months, and RBS is no exception -- shares of the U.K. banking giant have rallied close to 50% since the start of 2012. But now, a technical price setup in shares points to even more upside.
That's because RBS is forming a textbook ascending triangle pattern. The ascending triangle is a setup that's formed by a horizontal resistance level to the upside (in this case at $9.25) and uptrending support below shares. As RBS bounces in between those two significant price levels, shares are getting squeezed closer and closer to a breakout above that $9.25 ceiling. When the breakout happens , traders have their buy signal.