Although I aim to invest in fundamentally sound companies, I will use technical analysis techniques to help me determine when to buy or potentially sell a stock.
Today, I’ll go over some recent examples of technical charts of growth stocks: Tesla (NASDAQ: TSLA), Amazon (NASDAQ:AMZN), and JD.com (NASDAQ:JD). But these are techniques that you can apply to any stock chart, including dividend stocks.
There’s a lot of information here. So, it’s probably better to watch the YouTube video instead and pause it whenever you need to. However, in case you prefer a blog version, here it is:
JD Stock Chart Reading
JD’s recent technical chart is beautiful and perfect learning material so I’ll start with this one.
Figure 1. It bottomed and then consolidated with higher lows before breaking out from the resistance that was marked by its 200-day simple moving average (or SMA) that’s in red.
Figure 2. Notice that two indicators suggested a potential bottom. First, the Relative Strength Index (or RSI) hit below 30 (so the stock was oversold) and it eventually rose above the 30 mark.
Second, the Moving Average Convergence Divergence (or MACD) had the black line crossing above the red line, which indicated a change in direction of the stock.
The bottom was finally confirmed when JD stock climbed above the 50-day SMA, and it consolidated to eventually break above the long-term SMA.
Today marks the first day of the Year of the Rat as we bid farewell to the Year of the Pig. Unfortunately, this supposed time of celebration clashes with the coronavirus outbreak catastrophe that originated from Wuhan, China.
The Lunar New Year in China is the world’s largest annual migration of people, with hundreds of millions of travelers fanning out across the country and the world, and hundreds of billions of dollars spent on hotels, restaurants and shopping. (Source: New York Times)
The outbreak will undoubtedly negatively impact the already slowing Chinese economy, but it should only be temporary, if it is, as some experts believe, not as severe as the SARS virus that infected more than 8,000 people, caused 774 deaths reported across 17 countries, and devastated many in 2002-2003.
Contributors at Motley Fool Canada (including myself) cooked up a list of 15 top stocks for December 2019. Actually, I had trouble choosing my top idea for this month as the market kept grinding higher. I chose Enbridge (TSX:ENB)(NYSE:ENB), a defensive name that’s fairly valued with a high dividend yield and a proven track record of dividend growth.
I’ll comment on some of my colleagues’ picks.
Another Solid Energy Dividend Payer
Two contributors picked TC Energy (TSX:TRP)(NYSE:TRP), a smaller peer of Enbridge in the energy infrastructure space. TC Energy is a quality dividend name also but Enbridge offers a bigger yield right off — 5.87% versus TC Energy’s 4.48%, which is just a little more defensive should a market correction happen soon.
The Renewable Energy Space
Two contributors chose a stock in the renewable energy space: Innergex Renewable Energy (TSX:INE) and TransAlta Renewables (TSX:RNW). Clean and renewable energy is a good space to be in as it has secular growth, but I don’t have a strong opinion about these two names in particular.
Given the run-up in utilities in general lately, I think it’s best for investors to consider the space when it’s out of favour again.