Five Stocks to Buy in September, Revisited

By Andrew Nyquist
Back in early September, I wrote about Five Stocks that I felt were nearing the buy zone and could be bought before month end for a short to medium term investment.  By and large, the strategy has worked, as all of the targeted buy zones were hit and each of the stocks have strongly rebounded.  As a technical trader, I entered each of these stocks at some point during September, a few multiple times, and sold out of all of them for gains. Technical analysis isn’t for everyone, but it does work in that it allows you to define your risk and create targeted buy and sell zones.  Below are the updated short term charts for the five stocks to buy that were highlighted in last month’s article:  Arch Coal (ACI), Ford (F), Applied Materials (AMAT), Open Table (OPEN), and Best Buy (BBY).

But before we get into each of the stock charts, I want to take a minute to share a few secrets to successful technical trading:  1)  Mind over matter.  Stay patient and remain disciplined. Identify stocks [charts] you like and wait for them to come in to your targeted buy zone; don’t allow newfound emotional conviction to override your analysis.  Psychology tells us to buy and sell at the wrong times.  Understand and master your psychology.   2)  Buy in increments.  If you have a mental amount you want to allocate to a particular stock, do not blow the whole amount in one purchase.  3)  Don’t be afraid to book gains (selling done in increments as well)…. or losses.  Yes, the best traders know how to take a loss and move on.  Losses are mitigated by stops.

Okay to the charts we go.  Let’s start with Ford (F).  In addition to being one of the Five Stocks to buy I featured in September, I wrote about Ford in late August as well, feeling that it was best in breed and potentially nearing a turning point.  This logic was supported on both occasions by heavy near term support in the 9-10 dollar range.  Ford would prove to be highly volatile in September, but never breached 9 dollars and recently traded as high as 11.80 (on Wednesday).

Moving on to Best Buy, I saw a stock that was again nearing long term resistance and a consumer brand that people know, and know well.  Now, I won’t argue with anyone that the business has had some issues with strategy/execution and online competition, amongst others, but many times stocks get ahead of themselves in both giddiness and despair. The latter being the case here.  The targeted buy zone was 21-24.  Best Buy fell as low as 21.79, and recently traded as high as 26.31 (on Wednesday).

Next up is Arch Coal.  Now this is a stock that has burned me before.  I was in the name around 33 and stopped out around 31; in around 25 and stopped out around 24; in around 18, stopped out just below 17.  Between all this madness, I did have a couple of successful short term revenge trades, but needless to say, my time was coming.  Arch Coal dipped done to 15 and below and I couldn’t resist again.  The stock has since traded as high as 17.33 (on Wednesday).

Looking back on Applied Materials, we had both a technical and fundamental set up.  The stock’s price to earnings (PE) had signaled strong value and AMAT was paying well over a 3% dividend.  I targeted the 9-10 dollar range for buys. The stock traded as low as 9.70 and recently traded as high as 11.63.

And lastly, we have Open Table.  The stock had fallen so far and so fast that it felt a bit like catching a falling knife.  But again, remaining patient and executing an incremental buy plan helped.  I purchased the stock multiple times under 50 and sold into strength this week.  Although the gains were nice, I’m kicking myself a bit as it is nearing a technical breakout around 51-52.  I may re-enter this name soon (with a tight stop around 50-51).  The inverse head and shoulders is a powerful, intriguing bottom formation.

Note that this was a SHORT TERM update.  As I am an active investor, my strategy can, and will change.  It is also worth noting, however, that each of these stocks showed some longer term promise as well, and as such, I will be monitoring them for re-entry.  Remember the goal:  Buy lower, sell higher, and always book gains.  Have a great day.

———————————————————

Your comments and emails are welcome.  Readers can contact me directly at andrew@seeitmarket.com or follow me on Twitter on @andrewnyquist.  For current news and updates, be sure to “Like” See It Market on Facebook.  Thank you.

No positions in any of the securities mentioned at time of publication.

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.