While most technical stock traders are aware of the popular Bollinger Bands metric, a similar tool used to assess momentum and changes in market trend is the Keltner Channel. While Bollinger Bands are standard deviation bands enveloping a simple moving average, Keltner Channels are multiples (usually 2x) of the Average True Range (ATR) of a stock enveloping an exponential moving average (usually 20-day EMA).
Traders often watch for breakouts above the upper Keltner band as a sign of bullish short-term technical momentum. After a rough year in 2015, here are three materials stocks that are starting off 2016 with a Keltner Channel breakout bang.
General Steel Holdings Inc (NYSE: GSI)
Through Christmas Day, General Steel had booked a more than 75 percent drop in 2015. However, the stock has since spiked on massive volume, and a 105.7 percent boom on the first trading day of 2016 sent the stock plowing through its upper Keltner band. Shareholders are watching for the stock to settle back into the $3-4 range it traded within from June until the end of October.
Harmony Gold Mining Co. (ADR) (NYSE: HMY)
Like many gold miners, Harmony was hit hard in 2015 but has gotten a boost following the Federal Reserve’s decision to raise interest rates. A more than 14.3 percent gain to start off 2016 pushed the share price above the upper Keltner band and into bullish territory to start the year.
DRDGOLD Ltd. (ADR) Ltd. (ADR) (NYSE: DRD)
DRDGOLD is another gold stock that has started off 2016 on a positive note with a 6.0 percent gain putting it above its upper Keltner band. If the bullish move continues, the stock likely faces technical resistance at the $1.85 level that represents the October high.
Disclosure: the author holds no position in the stocks mentioned.
See more from Benzinga
- Jefferies On Retail: Here Are The Best Ways To Invest In '16
- FBR Deep Dives Into Global Handset Content Trends, Highlights Six Key Takeaways
- Goldman On Defense Sector: Outperformance May Have Only Just Begun
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.