With all the major indices at all-time highs, there’s an argument to be made for sitting into any open positions and not taking on additional smaller-cap risk. However, technical analysis almost always opens up additional opportunities for fast and aggressive moves for those investors so inclined.
Here are three stocks with interesting setups that are likely to move hard and fast one way or the other in the coming weeks and are worth keeping on your watchlist.
Hudbay Minerals NYSE: HBM
Technically speaking, shares of Hudbay Minerals NYSE: HBM look due a rally in the short term. They’re down almost 50% from April’s 2019 high but have been consolidating in a tight range since August and are on the verge of breaking out of that range to the upside. A 30% rally this month alone has given them some decent momentum to take into the new year and they’re starting to fill in a dirty gap down from late last July.
I say technically because fundamentally there’s not much there to support the long case in the long run. Q3 earnings in November disappointed Wall Street and showed the company running at a loss as operating cash flow fell 45% year on year. Having bounced along with multi-year support around the $3 level though, there’s no doubt that shares are putting in a strong performance and it feels like nothing but breaking news can hold them back between now and the next earnings event in February.
Over the past 15 years, this $3 has been tested time and time again while to the upside, $11 has been the number to beat. In the company’s heyday of the late noughties, investors knew was the high $20s felt like but shares have since bounced around in this $3-11 range. Having disappointed investors with their last earnings report, for now at least the downside is limited and it looks as if Wall Street is starting to realize that.
Watch for continued momentum to take the stock up and over $5 and then on towards $7. To the downside, watch out below if $3 fails to hold.
Ferrari NYSE: RACE
After a blistering 2019, it doesn’t look as if shares of Ferrari NYSE: RACE have any intention of slowing down in 2020. The stock has gained 80% in the past twelve months and is just below all-time highs as we go into the final few trading days of the year.
It’s been a healthy-looking march higher too, with plenty of pullbacks to release some pressure and to refill the tanks for the next push forward. There was a 15% retreat from July through September and this would have helped to shake out the weak hands while also lending weight to the bull case now that we’re back even higher.
A healthy beat on analyst expectations for their Q3 earnings in November sent the stock to all-time highs and while it has pulled back from those levels since the trading range has started to tighten considerably. Increasing pressure from both downward and upward slopes is setting up a showdown between the bulls and bears in the form of a pennant that should be played out in the coming weeks.
$164 has been a busy battleground in recent months and provides the first line of defense to the downside. However, were the stock able to break higher and take $172, there’s no reason it couldn’t kick on from there to blue sky territory.
Eros International NYSE: EROS
For a stock that was within cents of entering penny stock territory as recently as October, Eros International NYSE: EROS has been fighting hard in recent weeks to turn the tide. Investors of the Indian film production and distribution company have seen both sides of the stock and know exactly what it’s capable of. A 900% rally from 2013 to 2015 raised just about as many eyebrows as the subsequent 95% decline in the years since has.
Despite all the selling pressure, the bears ran out of steam this past summer at $1.25 and the bulls have since started to take control. A 130% rally since October sets the stock up for its second attempt to reclaim damage done during the last big leg down in June. News of its credit rating being slashed sent investors running for the door and prices spiraling that month and fundamentally, things have been tough since.
Their Q1 report in July showed a 42% fall in adjusted EBITDA year on year and the company reported a miss with their Q2 earnings in November.
All that being said, however, a fresh partnership with YouTube was announced shortly after November’s miss and this has helped to bring some optimism to investors.
The stock looks like it wants to get into the $4s and if it does, $7 becomes the next natural target. However, if it fails to live up to its promise, expect a swift retest of the low $1s.
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