Zak Mir on Golden crosses in US stocks TSU, GNK & BMA

Although over the past year I have become a fan of AIM stocks (even before the ISA news) and of small caps in general, I have been told by professional traders that all the big action in equities is to be had across the Atlantic.

Of course, in the UK many of us are still very much focused solely on British stocks. Unless we are guided purely by technical signals, our tendency is often to stick with what we know. Or at least, stick with what we think we know!

Nevertheless, I am sure there are many traders over here, who are obsessed as I am with the price action of the big ticket American stocks such as Apple (AAPL), Facebook (FB) and Google (GOOG). Not only do we all have a fair degree of familiarity with these global household names, there is also never a dull moment with them as far as trading volumes are concerned.

This said, I am also interested in slightly smaller US companies and today’s theme for my picks is a golden one.

No, I’m not talking about our magazine’s obsession with all things gold at the moment, but rather I am talking about three stocks that are currently in the grips of a “golden cross” buy signal. A golden cross occurs when the 50MA passes over the 200MA and is usually a gilt-edged opportunity to go long.  

I start off with an $11bn company, Tim Participacoes (NYSE:TSU), which is doing its best to undermine the theory that elephants do not gallop.

Of my three picks, TSU is the most likely to deliver a golden cross in the near future. In the case of TSU the 50MA passing over the 200MA also coincides with the top of the September bull flag at $23. The implication of this is that as long as there is no end of day close below Monday’s low of $22.18 (yes the stop loss can be that tight on this one), we are looking at significant upside from here. Over the next 1-2 months, I believe this could rise as far as the top of the November 2012 price channel at $28.

It would appear that we have a similar setup on the daily chart of Genco Shipping & Trading (NYSE:GNK), in terms of the combination of the 50MA & 200MA golden cross buy signal, which happened at the end of last week and coincided with the stock’s current bull flag:

My expectation is that there will be a breakout from the bull flag, whose peak is at $5, which was September resistance. However, the charting configuration of GNK appears to be positive enough so that aggressive traders can go long on the basis of the golden cross and remain in position while there is no end of day close back below the 20MA, now at $3.77. The end of the 2013 resistance line projection target could see GNK as high as $7 by the end of the year.

Finally, we have what may turn out to be the hottest of the golden cross trio Stateside today, coming in the form of Banco Macro Bansud (NYSE:BMA):

Here the moving averages’ buy signal was delivered at the end of last month and it can be easily seen that the stock has risen sharply from that point. The likelihood now is that the break through the present $22 zone resistance will be a robust one and that we can count on further sizeable gains. The favoured destination on the upside is currently the top of a July rising trend channel at $26, a target which could be hit as soon as the end of next month.