The bears swooped in on Wall Street right at Monday's opening
bell as weaker-than-expected China GDP data sent a wave of worry
across equity markets around the globe. Profit taking pressures
also returned to the precious metals market at the start of the
week, sparking a massive sell-off in gold; the yellow metal dropped
upwards of $150 an ounce on Monday, sending the prices well below
the $1,400 mark in just a matter of hours.
Amid the ongoing tug of war between the bulls and bears,
agriculture and forestry equipment manufacturer
Deere & Co.
) presents an intriguing opportunity at the moment that warrants a
closer look from swing traders looking to get a piece of the action
on Wall Street.
Consider Deere's one-year daily performance chart below. This
agriculture stock has enjoyed a nice steady uptrend (green line)
since bottoming out in early June 2012, and then moving up through
its recent peak of $95.60 per share. DE's decline over the past two
months appears to be a healthy correction when considering the
longer-term uptrend at hand along with the stock's ability to hold
its head above the 200-day moving average (yellow line) in recent
weeks. Plain and simple, DE's chart looks like a "buy" at the
moment as traders can establish a long position in anticipation of
a rebound while still closely managing downside as this stock is
trading near a major support level (yellow line).
Click to enlarge
Before jumping in long, investors should take note of the potential
trend reversal that may be brewing; since peaking at $95.60 per
share in late January 2013, this stock has posted a series of
consecutive lower-highs (red line) and lower-lows, perhaps hinting
at a potential trend reversal. As such, we advise using a tight
stop-loss for anyone looking to take a long position at current
levels in case our bearish suspicions prove correct.
DE's chart pattern is sending mixed signals as the ongoing
correction can be interpreted as either a healthy pullback or a
sign of a trend reversal. From a technical perspective, this stock
has major support around $82-$84 per share; in terms of upside, DE
could face selling pressures as it nears the $88 level. As always,
investors of all experience levels are advised to use stop-loss
orders and practice disciplined profit-taking techniques.
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Editor's note: This article by Stoyan Bojinov was originally