Zacks Investment Ideas feature highlights: Ani Pharmaceutical, Sucampo Pharmaceutical and Heska

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Dec 17, 2014, 09:30 ET

CHICAGO, Dec. 17, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Ani Pharmaceutical (Nasdaq:ANIP-Free Report), Sucampo Pharmaceutical (Nasdaq:SCMP-Free Report) and Heska (Nasdaq:HSKA-Free Report).

One Stock Chart Trick You All Should Know

Honestly, I don't care if you're a technical trader or a fundamental trader. It's sort of like a believe in God or nothing. It's no skin off my back. You do you, I'll do me. So don't go labeling me as a technical analysis only sort of guy. If that were the case I wouldn't work at Zacks. The Zacks Rank takes care of the fundamental side of the equation for me. And I can add my own spices to the special sauce and come up with my own fantastic fundamental recipe.

But the technicals are what get my motor running. I should put that on a T-shirt, I know. I've been fascinated by technical analysis since I first started watching markets. Couple that with a pinch of OCD and I've experimented with everything from point and figure charts to Ichimoku Clouds, spending countless hours in front of the computer screen. I've tracked stocks, currencies, commodities, indexes and more. You name it, I can claim it.

Through my journey I've found that the simplest of systems are often the best systems. Much like a professional spends countless hours practicing fundamentals until they are perfected, sometimes the simplest moves are the best. The best pool shooter I know taught me to shoot a bank shot and told me to shoot the same shot 3 hours a week, every week for a year. Keep it simple and be perfect at that simplicity.

One of the most basic, simple indicators that's available on every charting package and platform out there is the simple moving average (SMA). The name should give it away. The simple moving average is an average of an instrument's price over a specified period. It's this simple definition that is so helpful when you start to put price action in perspective.

Think about what it means for a stock to be in an uptrend. You're saying that the current price is increasing relative to what the price has been in the past. So the current price would then be above the average of the previous prices over a period of time. You can easily define an uptrend or downtrend based on where the current price is in relation to the moving average.

You can even measure short, intermediate and long-term trends by changing the number of periods you look back. A favorite system of many traders is to wait for a reversal of the short-term trend into the direction of the long-term trend. A crossover of two different periods can also show a change in the trend that can lead to huge profits for trend following traders. Let's use the 20 period moving average to find some Zacks Rank #1 (Strong Buy) stocks to buy based on this simple system.

Ani Pharmaceutical (Nasdaq:ANIP-Free Report)

Ani Pharma is just coming off a run where the stock ran from $25 in mid-October all the way to the 52 week high above $61. As the market experienced volatility recently ANIP pulled back, dipping below the 20 day SMA in early December and trading as low as $50.59.

Today ANIP has bumped itself above the 20 day and will likely close above it for the first time since hitting that 52 week high. If there is any continuation from that move tomorrow it could be a great time to enter a long position.

Sucampo Pharmaceutical (Nasdaq:SCMP-Free Report)

Sucampo Pharma is an emerging pharmaceutical company focused on the discovery, development and commercialization of proprietary drugs based on prostones. This Zacks Rank #1 (Strong Buy) has had several strong runs over the last couple of years. In each move, the stock has had a period of time where it pulled back to the 20 day for support prior to continuing higher.

The move from the lows of late September saw the stock more than double from $6 to over $14. The last week or so, the stock has pulled back after consolidating just above $14. This pullback now rests above the 20 day near $13 presenting a great opportunity to get in on the next leg higher.

Heska – (Nasdaq:HSKA-Free Report)

Heska is focused on the discovery, development and marketing of companion animal products. Like the other two stocks, HSKA is a Zacks Rank #1 (Strong Buy) in an industry that ranks in the Top 23% of the Zacks Industry Rank.

HSKA has repeated the same chart pattern a few times over the last year. It spikes higher after poking above the 20 day SMA, then slowly retreats into a bearish consolidation period then jumps higher again. HSKA has been consolidating since early November after hitting a fresh 52 week high. Today's sharp move to the upside has propelled it back above the 20 day implying the pattern could be repeating itself again.

Bottom Line

Just by using one simple indicator you can help insure you're entering trades in the direction of a longer term bullish trend. Remember the trend is your friend and if you can apply the K.I.S.S. method to your investing you can take out a lot of the noise in your trading.

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