In today’s up and down economy the old principle of buy and hold is slowly becoming an ancient artifact, as day traders have taken over using highly sophisticated chart patterns to reap gains. Though the basis of all investments should always begin with fundamental analysis, the variable which most believe is the prime factor driving share price, it is important to note that the major US indices (S&P 500, NASDAQ, NYSE, Dow Jones) haven’t gained a single percentage point over the last decade.
Below we highlight some of the most bullish chart patterns around, which stand a high probability of withstanding any economic cycles that may hit the markets in the coming months.
Boston Scientific Corporation (NYSE:BSX)
Engaged and broken out of the infamous ‘Cup and Handle‘ breakout pattern, a very rare, yet highly profitable pattern. With a measured move to $8.80, institutions and mutual funds will be sure to pour in as the uptrend continues.
From the chart, we notice that the 100-weekly moving average is the first resistance at $7.97, after-which the stock will be in a free flowing no resistance area all the way up to $8.80, which is also the top of the measured handle pattern.
On the metrics side, the Relative Strength Index shows money is beginning to flow back into the stock after it reached oversold levels, the MACD divergence and slow stochastic have both engaged in bullish crosses and look to be moving higher.
TransGlobe Energy Corp. (NASDAQ:TGA)
If you like double bottom, bounce plays, this is the investment for you. Coming off a mild disappointment in a potential oil well that instead was filled with water, the monstrous uptrend that saw the stock gain more than 400% this past year was shattered. However, to many expert chart traders, this represents a perfect buying opportunity based on a number of technical attributes.
Firstly, we can see that the correction finished right at the 50-day moving average of $13.70, which is normal and healthy for a pullback, especially considering the magnitutde of the uptrend. Next we can see that the Relative Strength Index (RSI) has once again gained momentum, and shows that smart money is pouring back into the stock. The slow stochastic has also reached a very oversold level and will look to base and bounce from here on out.
Rapligen Corp. (NASDAQ:RGEN)
For a penny stock play, you couldn’t ask for a better setup than this. The chart is currently showing the stock trading at the apex of a Ascending Triangle pattern, that could see a re-test of the 200-week moving average at $4.33, with a quick move to $4.75 should that be broken.
The Relative Strength Index (RSI) has moved off its oversold conditions during the first half of the year, and smart money seems to be once again moving into the stock.
Rapligen also has some upcoming catalysts that could push the stock price higher:
- Clinical Trials for Phase 2b for RG2417 (oral formulation of uridine), expected to report top-line results during 1st quarter 2011
- Complete Phase 3 trials for RG1068 (synthetic human secretin) for gastrointestinal or GI hormone to improve MRI imaging of pancreas, expects completion during 1st quarter 2011
BioSante Pharmaceuticals (NASDAQ:BPAX)
BioSante seems set to breakout based on analyzing its historical chart patterns. A move that was experienced in mid September looks poised to once again take place during the end of December to early January.
The first indication of an uptrend starting is the Relative Strength Index (RSI) which shows that funds are once again purchasing the stock. Should a breakout occur, we have the 200-day moving average acting as overhead resistance, with a clear break to $2 beyond that. Both the MACD divergence and slow stochastic are currently enageged in bullish crosses and look to continue the upward momentum.
BioSante also has some upcoming catalysts which could propel the share price higher:
- Expecting announcement of GVAX (therapeutic cancer vaccine) phase 2 study to begin at Johns Hopkins center during 1Q 2011
- Outcome of phase 3 LibiGel (testosterone gel) results to be posted during 1st half 2011, to support a potential NDA filing
Disclosure: I am long BSX, TGA, RGEN, BPAX.