This column is part of chartist Bruce Kamich's series on his Top 5 Stocks in the S&P 500.
5. NRG Energy (NRG)
NRG Energy suffered a big decline from its 2014 zenith, but prices have reached a low and are building a bottom that should support a decent bull move to the upside.
In this daily chart of NRG, above, we can see the three-month low for NRG made in December/January/February. The stock made a recovery into May and might dip to $14 or even $12 as part of the base pattern, but with the On-Balance-Volume (OBV) rising since September, this weakness should be a good entry point.
In this longer-term chart of NRG, above, we can see prices have rallied over the 40-week moving average line. Volume of trading was heavy at the December low and might be considered capitulation by longs. The OBV line has been improving since December. The MACD oscillator gave a signal to cover shorts and has moved up to the zero line. Crossing above the zero line would be a buy signal.
Strategy: Traders could use weakness to $14 and $12 if available to go long NRG. A close below $11.50 would be all the risk I want to take on for this security.
Bruce Kamich's Top 5 Stocks in the S&P 500: