Last week’s picks*:
VA: CPA +0.25%
FX: AUDUSD -60 pips
SC: WILC -0.69%
SS: VGR +0.63%
VA: FCX -2.23%
Not a great week for the picks as stock markets tapered off on Friday. The problem with doing weekly stock picks is that five days is rarely enough time to see any decent moves. Nevertheless, it’s good practice and interesting to see how they pan out.
Coming up this week we have another FOMC meeting. Investors seem nervous that the Fed might do something hawkish but it’s very difficult to predict a change in policy at this point in time. Here’s some picks to keep an eye on:
Freeport McMoRan Inc $FCX
I will probably regret it but I’m going to stick with Freeport McMoRan this week as the stock is in a short term oversold condition, despite being a strong value play.
A couple of months ago, traders could not get enough of the copper producer after a very positive conference was given by head management. However, difficulties in Indonesia have really slowed up progress. The stock is cheap with a PEG of 0.38 and is oversold with an RSI of 24.
Are we going to see a rebound in EURUSD this week? The currency could be nearing a reversal point and the currency has stalled since we moved below the 1.30 barrier. That should be a key level and see some consolidation. As well, there was a mini doji last week, suggesting uncertainty and time for a bounce.
Discovery Communications Inc $DISCA
This week’s mean reversion trade is Discovery Communications Inc which has a daily RSI reading of 24.81. Discovery Communications is the company behind the Discovery Channel, the Oprah Winfrey Network and loads of other stations.
The stock has taken a beating recently and is down 14% year-to-date, making it oversold and ready for a bounce. PEG ratio is 0.66. The Street also upgraded the stock to a buy on Friday so could benefit from that.
NGP Capital Resources Company $NGPC
Nearly went for GoPro but NGP Capital Resources looks shaky after climbing almost 10% this month. The stock has a truly expensive PEG of 7.55 and trades at 83 times price to earnings. RSI is 73.55 indicating an overbought condition and the current ratio is lower than one. This one is overdue a pullback.
*Hypothetical results. Commissions and slippage not applied.
Disclosure: I am long FCX.
Additional disclaimer: Please be aware of the usual risks to trading in financial instruments. Please remember the importance of doing your own research and understand the cost to trade including trading commissions and the bid:ask spread.