We have the luxury of being able to trade and invest in many foreign stocks.  China has been BOOMING, and particularly in the Shenyang area: an industrial mecca.  As manufacturing demand continues to increase, so does the need for power.  Today’s Company Invest pick, A-Power Energy Systems, provides onsite distributed power generation systems and micro power grids for industrial companies Shenyang, People’s Republic of China.

COMPANY PROFILE:

A-Power designs, constructs, installs, and tests distributed power generation and micro power grids as stand-alone facilities for various customers in the steel, chemical, ethanol, cement, and food industries. The company also offers automatic control systems to monitor the performance of equipment in the system, including the boiler, turbine, generator, grid supply, and demand and distribution, as well as space and water heating functions. In addition, it manufactures and sells wind turbines.

FUNDAMENTAL TIDBITS:

• A-Power features a LOW price to sales ratio of 0.83, making it a value play.
• Share price of under $6 makes it an affordable trade
• High Beta of 2.95 means profitable, fast trades when technicals flash buy signals
• 16.5% short interest means short covering could elicit a nice gain fast!

COMPANY INVEST TECHNICAL ANALYSIS

Once again, we find most of the US stock market in an overbought state.  Not the case with APWR.  Starting at the top of the chart is the ADX momentum indicator.  The indicator got a bullish +DI cross on 2/13/11 which has since been confirmed.  Further, the ADX line which measures trend strength looks ripe for a nice run after bottoming out at the recent 2011 selloff.

Looking at the candlestick daily price chart, APWR had a 3/10 Exponential Moving Average cross (GOLDEN CROSS) yesterday, 2/14/11 that was confirmed with a higher close today.  This is extremely bullish.  Look at the chart and the excellent signals it gives on the 3/10 EMA cross.

The MACD is a thing of beauty.  A POWERFUL bullish divergence is playing out.  Look at the WAY higher low that has been formed with the MACD line (black).  Also, look for a MACD/signal line bullish cross possibly tomorrow.  In addition, the MACD is approaching the zero line, which is also quite bullish.

Finally we look at the slow stochastic oscillator.  This oscillator does a good job indicating overbought/oversold conditions.  A healthy reading of 45 shows APWR has positive momentum and there is plenty of juice left in it.  In addition, the weekly stochastic is low and just got a bullish cross.  Company Invest thinks this could also be a great stock to hold even for several months.

Company Invest Bottom Line: This is a great safe entry point for a trade since APWR already has some positive momentum.  Also, the stock is in a wonderful position to place a stop right below the 50 day moving average at around 5.55.

At Company Invest we are always harping against buying stocks at the top or chasing momentum stocks. Imagine a poor guy late to the train station chasing the train as it pulls away while holding his ticket up in the air.  Same thing here.

For another analogy, think of a new restaurant you discover and love.  Great food, tremendous service; a well kept secret. Then, as the word gets out and business explodes, you notice the service level dropping off, portions become smaller and overall quality suffers.  That’s about the time where you decide to try another restaurant and give your table up for someone else.  Bottom Line: Don’t chase momentum stocks…

On the plus side, even in a bullish environment and one in which we’ve had 7 straight up days on the S&P, there are still bargains to be found.  Today’s Company Invest pick, James River Coal Company (JRCC) is part of the energy and materials sector.  After a tremendous bull run from October 2010 to January, 2011 (a 70% gain!!!), JRCC has now retraced 50% from its January highs. There are some chart signals that tell us now is a good time to put our toe in the water here.

A. The short term (3 day) Relative Strength Index (RSI), or a stock’s recent performance against its past performance is overbought and looking like it is forming a bullish divergence with the price channel (see blue upward sloping line).

B. Looking at the pricing chart, you can see the selling that has taken place since early January, 2011, resulting in a 50% retracement of the high at $27.06.  How do we know if this is a true selloff or if it is simple profit taking?  Volume tells the story.  Look at the height of the recent buying bars, vs. the height of the red bars?  Simply put, there are still more buyers than sellers of JRCC.

Also, there is good price support right here for a trade. $20.86 was the last minor low, and we are coming back to that support level for a test now.  You could buy 100 shares here and put a .50 cent stop in.  Your risk would only be $50, but the potential reward could be in the thousands, should this trade play out.

C. The MACD histogram is trying to move up towards the zero line here.  NOt a strong signal yet, but something to watch.  Also watch the MACD line (black) for a bullish cross with the signal line (red).

D. Finally, the slow stochastic looks like it is also forming a bullish divergence and a possible higher low. Look for a bullish cross up above the 20 level.

Company Invest Bottom Line: By 50 or 100 shares here with a tight stop.  If the trade starts moving your way, pour it on.  If not, you have a very small loss.

Today’s Company Invest pick is dry-shipper, Excel Maritime (Symbol EXM). Dry shippers should benefit from Asian economies booming since the dry shipping industry provides vessels to transport dry goods such as iron ore, coal and grain, steel products, fertilizers, cement, bauxite, and sugar and scrap metal. As of March 10, 2010, it owned and operated a fleet of 47 vessels comprising 5 Capesize, 14 Kamsarmax, 21 Panamax, 2 Supramax, and 5 Handymax vessels with a total carrying capacity of approximately 3.9 million deadweight tonnage. The company was founded in 1988 and is based in Athens, Greece.

EXM also fits our other criteria for a Company Invest pick: it has just experienced a sizeable pullback. Remember, we’re always looking for stocks on sale; Trying to chase stocks like AAPL, NFLX and GLD is a futile effort right now. Also, at $5.55 a share, it’s affordable for any investor.

Looking at the daily chart, “A” is our ever-popular 3-day Relative Strength Index (RSI). Look at how oversold it is, and it looks like it is headed back to the 30 level, which is bullish.

“B“is the candlestick pricing chart. Today’s candle opened lower than yesterday’s close, only to hit solid support at the $5.50 area, bounce right off of it and rally into the close. Today’s symbol is a “spinning top” which is a sign of investor indecision. This is significant after nearly a two-week correction. We could be looking at a bottom here.

Look at the recent volume bars (“C“). Do you notice even during the correction, there seems to be more buyers (gray bars) than sellers (red bars)? Volume has been higher on positive days, which is bullish.

Today we also had a bullish PpP pattern (“D“) on the MACD histogram; a sign of a possible reversal. This just means we had a shallower blue bar today, reversing the recent trend.

Finally, the slow stochastic “E” got a bullish cross today.

Company Invest Bottom Line: Take a shot at EXM here with 100 shares and put a stop in around $4.97 . Your risk will only be a mere $50, but if the trade starts going your direction, pile on the shares and  and you could ride it up above $7 for a nice 40% gain!  Risk to reward is on your side on this one!

TAKE ADVANTAGE OF ALTERNATIVE ENERGY PLAYS

The boom in alternative energy stocks has given rise to a boon in alternative energy ETFs. More than a half-dozen funds launched in the past few years, and more are on the way.

The newest wrinkle is funds that focus on specific technologies. Today’s Company Invest pick is “TAN,” an ETF that provides access to the solar energy market.   This fund offers exposure to the global solar energy market and a very inexpensive expense ratio of 0.65%.

We are always looking for pullback stocks to buy at Company Invest and TAN has experienced quite a correction here recently.  It is always better to buy stocks or ETFs when they are on sale, instead of grabbing them at the top of rallies.

IS “TAN” A BUY?  COMPANY INVEST TECHNICAL TAKE

The chart looks very favorable for a winning trade, or even a longer term investment right now in TAN.

“A” is the 7-day Relative Strength Index (RSI), a measure of a stock or ETF’s strength against its recent pricing.  The RSI is giving two buy signals: One it is sitting in oversold territory (20.88) that it hasn’t been in since the end of August.  The last time the RSI was this low, TAN gained 36%!   Also, the current RSI has a bullish divergence (higher low), while at the same time the price is making lower lows.  This is a powerful foreshadowing of a reversal.

“B” is the candlestick pricing chart of TAN.  It has corrected from $9 to the $7 range and a higher low (compared to the August low) looks to be setting up.  Today’s candlestick was a spinning top, which indicates indecision, and more importantly the selling occurred on very light volume.

“C” is the recent selling bars as TAN corrected.  Look at the massive selling peak that took place last week with those huge red selling bars.  Now contrast that with this week’s selling volume.  This tells us the selling may be over.

“D” is the MACD histogram, a wonderful predictor of momentum change.  There is a bullish divergence between the histogram bars and the price.  If TAN can get over $7.50 it will be extremely bullish, as that would confirm the histogram’s directional change.

“E” is the slow stochastic momentum indicator.  Yet another bullish divergence is setting up here.

Company Invest Bottom Line: Grab 100 shares here and put a stop at $6.77.  That way if TAN breaks the August lows, you are safely out.

If you just getting started with online trading and need a discount broker, consider Tradeking.  You can click their ad at the top of the page to fill out a quick and easy application, or, if you want to switch from a high cost broker to enjoy $4.95 a trade, .

It’s been a crazy week on Wall Street.  The move has been mostly down with the exception of yesterday’s tremendous rally because of the GM IPO and a better than expected economic report (Philadelphia Manufacturing).  But all week the retail sector has been strong, and today’s Company Invest pick, Lowe’s (LOW) in particular looks poised for a big rally.

COMPANY INVEST TECHNICAL ANALYSIS

Looking at the chart “A” is the 3-day Relative Strength Index.  As you can see the momentum is positive and it is about to break through 50.  RSI readings above 50 are considered quite bullish.

“B” is the price chart.  Notice, instead of the usual candlesticks, I chose to display a line chart.  This is good for seeing certain patterns.  There is a powerful bullish pattern called the “W” pattern.  Essentially it is a double bottom pattern where the stock sells off, rallies, then pulls back again before really taking off, thus forming a “W” shape.  Two keys to this pattern:  #1 the second “V” of the “W” should not dip as low as the first.  What this says is that after a rally, there was just some normal profit taking (not a heavy selloff).  #2  The most powerful occurrence of the “W” pattern is when you see it occur right under a major moving average.  That’s because many short sellers place their stops right above moving averages.  So the theory is, if the stock price breaks through the moving average, those shorts will be forced to cover and buy back shares they sold, thus making the stock move even higher.  If it sounds confusing, don’t worry.  Just look for the W under either the 50 day or 200 day moving average with the right side higher than the left and you’ve got a winner.   And look at Thursday’s chart of LOW.  BINGO!

“C” is the MACD histogram.  Yesterday we got a bullish pPp reversal on the chart.  This is a 3-bar reversal where you have a selling bar, a deeper selling bar, then a shallower selling bar.  Confirmation of this pattern will occur when LOW closes above $21.64 (yesterday’s close).

“D” is the slow stochastic momentum indicator.  Notice the nice higher low the stochastic put in (green up-sloping line).  Also, we got a bullish touch of the signal line (black) with the stochastic line (red).  Look for a solid cross of the signal line to the upside for confirmation.

Company Invest Bottom Line: Looking at the black parallel lines in the price chart it looks like LOW could easily gain 10% in the near future and move to the $23.25 area for a great trade.  Start with 50 or 100 shares and put a stop in at $1 below the purchase price.

Company Invest Recent Picks:  Still holding ERY and QID despite a rough day yesterday.

Despite Ben Bernanke and the Federal Reserve’s $600 billion effort to prop the stock market and economy, it looks as if a correction is in order now.  Now would be a good time to pause, take profits and sell a portion of your long positions, or, if you are aggressive, why not make money when the market goes down?   You can do that by shorting stocks, buying put options, or, our preferred method, buying inverse ETFs.

We know that the market goes down much faster than it goes up because fear is a powerful thing, especially when coupled with money.  Right now the early signals indicate a 5 to 10 percent correction looming in the S&P 500.  And when the S&P 500 goes down, 3/4 of all stocks go down with it so take heed.  If you want to stay in your long positions, that’s fine.  Use a 5 to 8% trailing stop (whatever you are comfortable with).  A trailing stop is a wonderful tool offered by most online brokers.  It is a variable selling point and is great when you’ve already made money and want to lock in your profits.  If you put a 5% trail in, your selling point is always 5% lower than the current bid for the stock or ETF you are in.  That way, if the price keeps going up, so does your stop, however, once it corrects 5%, your shares are automatically sold, and your profits are locked in.

Today’s pick is QID.  QID is a reverse ETF which moves in the opposite direction of the QQQ’s (technology ETF).  That is when the technology sector is going down, QID is going up.

Looking at the chart there are several encouraging signals:

“A” is the slow stochastic momentum indicator.  It has been oscillating in oversold territory since early September!  We think this time the stochastic line has a great shot of going all the way up to 80 (overbought).  If that happens, QID will rally bigtime!  There is a powerful divergence between the stochastic and the price channel.  Look at the severely downsloped price trendline (red), compared to the stochastic lows (green line).  The stochastic line is flat to slightly sloping upward, indicating a change in trend.

“B“is the price chart for QID.  We had a powerful white candle on Friday (typically a selling day) and QID had a positive week overall.  More importantly, are the 3 and 10 day Exponential Moving Averages (EMAs).  The green and red arrows in the chart indicate buy/sell signals generated when the 3 day EMA (blue line) crosses up or down through the 10 day EMA (red line).  As you can see this technique gives wonderful stock trading signals.  The last signal (SELL) occured at the beginning of September.  Since then QID has gotten a 36% haircut! As of Friday’s close the 3 day EMA is EXACTLY the same as the 10 day and is just about to cross to the upside.  Monday could be an EXCELLENT entry point.

“C” is the MACD histogram.  Look at the massive bullish divergence between the histogram and the price channel.  This is a powerful buy signal.

“D” is the ADX indicator.  You get a buy signal when the green line crosses up through the red line (heading that direction but hasn’t happend yet).  However, the ADX line (black line) gives early signals.  The ADX line measures trend, and the trend has been up since early September, however that line is now rolling over and sloping down.

Bottom Line: Look for an entry point Monday and buy 50-100 shares of QID with a stop $1 below your entry point.

UPDATE: We had two wonderful stocks here in X (US Steel) and DGP (Double Gold ETF).  Hopefully you took profits and sold all of your shares now.

ERY:  We recommended it last week, but our stop of $29.20 was triggered.  However, ERY rallied hard on Friday and we really like it again as a trade.  Look to re-enter on Monday.

At Company Invest,  we strive to provide analysis to give readers the most accurate forecast for the best stocks to buy based on recent chart signals.  We use technical analysis as our primary trading strategy.  For those who don’t know, technical analysis is the study of stock price charts.  We get signals from a variety of indicators including chart patterns, support and resistance levels, Japanese candlestick signals, moving averages, volume, and a variety of momentum indicators.

Before we get to the charts, on a macro level there are some interesting news events to consider.  With last week’s Federal Reserve decision to enact Quantitative Easing (QE2), many assumed, and rightly so, that the dollar would get trashed while commodities, especially precious metals would soar.  And that pretty much came true last week with gold hitting a new all-time high above $1,400 an ounce.  However, it seems to me this week (in a 180 degree reversal to that theory) that the Fed would like to strengthen the dollar.  There seems to be a sector rotation going on here that started yesterday and continued today.  The sector rotation appears to be a move out of gold, commodities, and treasuries and into stocks.

That brings us to today’s Company Invest pick, ERY.  ERY is a bearish Exchange Traded Fund (ETF) for the energy sector.  With what seems to be a coordinated effort to strengthen the dollar and with the dollar’s chart (UUP) looking quite bullish, the energy sector is setting up for a big correction.  And, by buying ERY, you can capitalize by making money when energy stocks go down.

COMPANY INVEST TECHNICAL ANALYSIS

Looking at today’s chart, “A” is the Relative Strength Index (RSI) set to the 7-day period.  At a reading of 10.44, the RSI is more oversold than it has been for at least 6 months (this entire chart).  This tells us a bounce is coming.

“B” is the ERY price chart.  Last Thurs, Nov 4 ERY gapped down pre-market and then continued to sell off throughout the day.  A “gap” occurs when prices move up or down outside of the trading session (in futures trading).  Technical analysis tells us that most of these gaps are eventually filled, meaning there is a very high probability that ERY goes back to the $34-$34.50 area in the near term.  That would mean over an 11% possible gain on a quick swing trade.  Also, yesterday’s candle was a hollow red candle, which indicates a reversal could be imminent.  The hollow red candle meant that ERY gapped down premarket yesterday, moved lower, then rallied the rest of the day to close higher than it opened, yet still lower (barely) than the previous day’s close.

“C” is the MACD histogram.  A shallower blue bar at the end of today’s session would indicate a reversal and a possible bullish divergence between the histogram and the price chart.  These bullish divergences happen when prices make a lower low, but the histogram makes a higher low (see sloping up green line on histogram and sloping down red line on price chart).

Finally, “D” the slow stochastic momentum indicator got a bullish cross (signal line “black” crossed up through the stochastic line “red”).

Company Invest Bottom Line:  This trade has a good risk reward.  You can buy it here and put a stop at $29.20, for a move to $34-$35.

QPK6H54PJ6RF

Even though we’re still somewhat bearish on gold  right now at Company Invest, the chart signals are telling us the trade right now is to the upside.  We prefer to use DGP, which is a double gold ETF.

COMPANY INVEST TECHNICAL ANALYSIS

Looking at today’s chart, “A” is the Wilder’s ADX indicator.  Welles Wilder developed the Average Directional Index (ADX) to evaluate the strength of a current trend, be it up or down.  Low readings (below 20) indicate a weak trend and high readings (above 40) indicate a strong trend The ADX line (black line) measures this trend.  It has settled back to 24.39, after staying at an overhead level for a couple weeks. The other two lines on the indicator are the +DX (green) and –DX (red).  Buy and sell signals are generated in a trending market when a +DX/-DX crossover occurs . On 10/28 we had a bullish DI cross.  Confirmation of this buy signal occurs when the stock closes above the high point of the day of the crossover.  On 10/29 we got that confirmation with a close of $39.30. Buy signal firmly intact.

“B” is the daily pricing chart of DGP.  I prefer candlestick charts, because they have useful predictive qualities.  In this case, a red spinning top on Oct 27 (candle body has shadows extending both above and below it) indicated a temporary bottom.  Spinning tops occur on volatile trading days when the stock trades well above and below its opening and closing price throughout the day.  It marks investor indecision.  When this occurs following a multi-day trend, it suggests a pause or change in direction.

Secondly, I plotted this chart with 3 and 10 day Exponential Moving Averages (EMAs).  3 and 10 day EMA crossovers give wonderful buy signals.  Look at all the great signals on the chart when one line crossed the other. Today the blue line (3 day) crossed up through the red line (10 day).

Finally, as “C” shows, we had a confirmation of a bullish “PPP” pattern on the MACD histogram today. You can see this pattern on the chart. A higher low bar was put in yesterday, while today, 10/29 the stock closed higher than it did yesterday, confirming the signal. “PPPs” also give good, solid signals.

Company Invest Bottom Line:  Buy DGP Monday for a possible run into the $44-46 range.  Put a stop right below $37 (nearest support).  That way, you cap your potential loss

With the dollar rallying most of the past week, materials and commodity stocks have consequently sold off hard and US Steel is no exception.  Since October 11 (in just two weeks), the stock has pulled back 13.51%.

Trading is all about finding the right time to buy.  Many investors strictly look at company fundamentals (earnings, cash on hand, debt, price to earnings ratios, etc) to place trades.  Problem is fundamentals will tell you WHY to buy a stock, but not WHEN to buy.  That is where technical analysis comes in.  Using chart patterns and momentum indicators, we can tell when the highest probability of a good trade will occur.  And at Company Invest, we think right now is a great time for a US Steel trade.

COMPANY INVEST TECHNICAL ANALYSIS

“A” is the 3-day relative strength index, a favorite swing trading indicator at companyinvest.com.  As you can clearly see, this indictor is WAY oversold (brown area). Look at what happened the last 5 times the RSI was this oversold (green circles).  Now look at the corresponding green arrows on the price chart that indicate trade entry points.  Each entry point resulted in a minimum of a 10% gain!  And here we are again…

“B” is the daily stock pricing chart (going back to mid May).  “Support” is very important in technical analysis.  Support happens when the big investors (pension funds, hedge funds, 401k fund manager) come in and buy.  We’ve illustrated two key levels of support on this chart (S1 and S2).  US Steel has been trading right at the S1 support level for the past three trading sessions without falling below it.  In this case it means buying the stock at $40 and change is a great entry.  Notice how the $40 level was also key support back on June 7.  And should the S1 support break, the next support level (S2) is the $37 area.

Also, the red selling volume bars have been getting shorter over the last 3 trading sessions while the stock has been basing.

“C” is the MACD histogram which gives nice advance signals for stock directional change.  Although you can see selling momentum has been occurring (stair step down blue bars), it looks as if a bullish divergence is occurring between the MACD histogram and the price chart (green line in “C” Vs. red line in “B”).  Simply put, it looks as if a higher low is setting up on the histogram, while at the same time a lower low has occurred on the price chart.

“D” is the slow stochastic momentum indicator.  At 8.88, it’s also deeply oversold.  Look for the signal line (black) to cross up through the MACD line (red) in the next day or two.  Multi day rallies in the stock occurred the last 4 times this signal was triggered (green circles).

Company Invest Bottom Line:   Grab US Steel (X) here and point your stop loss order in just below support at around $39.95.  A $44 price target could be hit in just a few trading days.

Today’s Company Invest pick is Bank of America (BAC) — another selection from the financial sector.  At CompanyInvest.com, we will only select stocks for trades that are not overbought, but right now most of the market is terribly overbought so it becomes a challenge to find stocks to trade.  Think of buying at wholesale and selling at retail.  We’re always looking to buy stocks when they are on sale.  In just two weeks time, BAC has pulled back 11%.  Now could possibly be a great time to enter a BAC position to the long side.

COMPANY INVEST TECHNICAL ANALYSIS

Looking at the daily chart, “A” is the slow stochastic indicator which measures buying/selling momentum.  A reading of 80 is considered overbought, while 20 is considered oversold. Today’s reading is at 7.30, way oversold.  Also, BAC has moved into oversold territory and out twice prior to now.  You should always buy when the stochastic indicator is on the bottom, so the extreme oversold status here is bullish.

“B” is the daily price chart of BAC going back 6 months or so.  The first thing to look at are the red and gray volume bars below the pricing candlesticks.  Look at the selling volume (red bars) that occurred last week. Those high volume bars could suggest “capitulation,” which occurs when panic selling happens and everyone is selling the stock.  A shakeout of sorts. Since then the red bars have been shorter indicating the selling is slowing down.

Next. we drew parallel red trend lines illustrating the downtrend that has occurred in BAC since last April. From these trendlines it looks like we have a low target of just below $11/share, and a high target somewhere between $13.30-$13.40.  So if you buy BAC near $11 and it runs to $13.40, there is a possible 21.81% gain to be made on the upside here.  We like that number!

Finally, “C” is the 3-day Relative Strength Indicator (RSI).  The 3-day RSI gives great swing trading (2-3 days to 2-3 week hold) signals.  Right now the RSI is way oversold (note the brown areas).  If you look at the last 8 times the RSI was this oversold, there was a rally of some magnitude ALL 8 times (The green arrows in the price charts indicate the trade entry points based on the RSI buy signals).

Company Invest Bottom Line:  Buy BAC here and put a stop loss order in at $10.47.  That way your risk is very low, while the potential reward is quite high.