For investors, 2017 will be memorable for many reasons. Topping the list will be the impressive string of all-time highs reached by the major stock indices. In the world of equities, the trend has certainly been a friend to the bulls this year.
In the world of currencies, 2017 will be remembered as the year of the U.S. dollar bears. The trend has been their friend as well, with the greenback's slide beginning almost at the start of the year, and continuing nearly unabated.
Perhaps those two trends are related. After all, the weak dollar boosted certain stocks in 2017, and it's likely to have ramifications into next year. Which stocks stand to benefit from a weak U.S. dollar for the rest of 2017 and beyond? It's time to put together a weak-dollar shopping list.
If we look at the chart of the U.S. Dollar Index, presented here without indicators, we can see a steep rally that begins with the 2016 presidential election (point A) and ends at the beginning of 2017 (point B). The buck did manage to rally in September and October, but then relinquished those gains in November (point C).
There are certain stocks that perform well when the dollar is weak, because those companies do a substantial amount of business overseas. What is interesting now is that several of those companies have pulled back recently. When a blue-chip name pulls back in a bull market, it's usually worth a look; when that company has the advantage of being a strong performer in a weak- dollar environment, it deserves special consideration.
First up is Johnson & Johnson (JNJ) . This stock has had a solid year, gaining 19.79%. After hitting an all-time high on Oct. 23, J&J has pulled back to its 50-day moving average (blue). The stock is no longer overbought, according to its RSI (relative strength index) indicator, making it a good time to buy.
Procter & Gamble (PG) hit an all-time high on Sept. 20 (shaded yellow) but has sold off sharply since then. The stock fell to an area of strong support (dotted line) and has formed a bullish cup-and-handle pattern. The path of least resistance for P&G now points higher.
Finally, Kimberly-Clark (KMB) has had a quiet year, rising just 2.07%. However, the stock is about to get a rare weekly MACD (moving average convergence divergence) buy signal (shaded yellow). When the lines cross, it'll be just the second such signal this year. The first weekly MACD buy signal, in January (arrow), led to a gain of nearly 20% in two months.
(This commentary originally appeared on Real Money Pro at 11:30 a.m. ET today. Click here to learn about this dynamic market information service for active traders.)