The construction and engineering sector is still showing increasing lows but stagnant highs. I'm not a full-fledged technician so while I'm sure the pattern has a name I have no idea what it actually is. What I do know is that it signifies an increasing likelihood of a move. There's always the potential for a downward move, but the strategy I use is intended to cut losses short and let winners run. Oil and gas production and exploration companies continue to show a very nice bounce from a 6 month downtrend. The same goes for specialized consumer services. After its monumental cratering just shy of 3 months ago it has held a nice floor and has started a very slow climb upwards. Still, upwards is upwards.
Two picks this week along with a few interesting ones to keep an eye on.
Chicago Bridge and Iron (CBI) - This stock fought for it for nearly 2 weeks and finally made it above its 30 day SMA on Thursday. This was the final signal on top of an already positive MACD Histogram and uptrending stochastic. It's even stronger since it had proper volume support and the stochastic is the result of a crossover as well. The PEG ratio of .79 indicates that there should be plenty of upward momentum for this run, and this is just the beginning of it. I started a CAPS pick on this one today.
Outerwall Inc (OUTR) - This one is still a buy from last week. The nice part of the sour market the past couple days is that it kept OUTR from overheating on its SMA breakout. And with the MACDH and stochastic still in positive territory, this one should have a good week. There is still plenty of room in the PEG ratio with an increase in their expected earnings shrinking the number to .73.
Aside from these 2 picks there is another stock to keep on your radar this week as it could move into buy territory.
Green Mountain Coffee Roasters (GMCR) - It just crossed over its 30 day SMA Friday but still has a MACD Histogram in the sell realm, however, it appears to be bottoming out. Even though the stochastic is also downtrending one solid day in the early part of next week could turn this to a solid buy. As I've mentioned before, GMCR likes to run on momentum as well, so the PEG ratio is less relevant as long as volume supports the 3 buy signals.