5 Consumer Stocks Setting Up to Charge Higher in 2013
A quick resolution would put an end to one of the biggest barriers to a stock rally right now, quelling some of the extra anxiety that investors are shouldering. With the New Year fast approaching, investors are getting reminded of 2012's bullish first quarter price action. Thanks to a number of structural similarities between then and now, we could very well see a repeat performance when the calendar flips over to 2013.
That's why we're taking a technical look at the five setups that have the tradable price setups right now.
For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.
So, without further ado, let's take a look at five technical setups worth trading now.
Fortune Brands Home & Security
There's no two ways about it -- it's been a stellar year for shareholders of Fortune Brands Home & Security (FBHS) : shares of the $4.8 billion home improvement and security stock have rallied more than 74% since the first trading day in January. And now, it looks like Fortune could be headed even higher in 2013...
That's because shares are currently forming an ascending triangle pattern, a bullish setup that's formed by horizontal resistance to the upside and uptrending support below shares. As FBHS bounces in between those two lines, it's getting squeezed closer and closer to a breakout above that $30 resistance level. When the breakout happens, traders have a buy signal for this stock.
As close as FBHS is to that $30 breakout level right now, this trade looks likely to trigger this week; that's why it's worth keeping a close eye on. The 50-day moving average has acted as a pretty good proxy for support in the last two months, so it's a logical place to put a protective stop below.
We're seeing almost the same setup in shares of Weight Watchers (WTW) . Like FBHS, Weight Watchers is forming an ascending triangle, with one big caveat: the ascending triangle setup in Weight Watchers is coming at the bottom of a downtrend instead of the top of an uptrend. Even so, the trading implications for both stocks are the same. In WTW's case, the buy signal comes on a breakout above $57.