1. Hain Celestial Group (HAIN)

To begin reviewing each of the top 10 stocks on our list I thought I would start with my favorite. Now, its not generally a good idea to have a "favorite" stock. The likability of a company or stock can create poor investment decisions and can cost you money. But how are we ever suppose to choose a stock to follow if we don't like any of them? Also I need to clarify that my reason for liking a stock will vary depending on the issue we are looking at. Some I will genuinely like the company, others will just have outstanding looking price charts. What is important though is making sure you stick to your trading/investing rules regardless of how much you "like" a stock.

We will talk all about building an investment plan in future posts, for now we want to simply get used to the basics and learn to watch the price movements of a few stocks. The terms and concepts will take care of themselves once we are familiar with listening to the price.

Hain Celestial Group (HAIN)
Sector: Consumer Products

Organic foods/products producer and distributor

The Hain Celestial Group is a producer and distributor of organic and sustainable products. They own many products I use in my daily life such as Garden of Eatin' chips, Alba and Jason brand products, Celestial Seasonings tea, Arrowhead Mills, and many more. Since I have a 1 year old baby at home now, I use a ton of Earth's Best baby products as well.

There are not many stocks I would consider holding forever (I tend toward trading more than investing), but HAIN is one that I do like for the long haul. As I posted recently, I feel the sustainable and organic movements are here to stay. People will continue to seek out healthier food options for their families and I also believe we will choose toward a more energy efficient future. And HAIN has done nothing but grow at a rapid pace over the past 10 years. The stock has grown as well; after the crash in 2008, HAIN has gone from a low of $11.18 to a high of $73.72 in September 2012. This has been a big winner for me personally as I jumped on board early last year around $39 in February. I have since sold my position and am currently waiting for a new opportunity to buy back in. I believe that time is approaching, but not just yet.

As of the close of trading Friday Jan 4 HAIN is attempting to jump above its support zone after buyers have shown an interest in the stock again around $50. The lines I have drawn above show my best representation of the intermediate term support area. Between the $57 and $50 price range. What we would like to see happen here is for the stock to move above $57 and hold (not just fall right back). That would show that the price has found support in the zone we were targeting and seems to want to push higher. Having a well defined "line in the sand" is very important when buying a stock. You cannot control what the market does, but you can control how much money you are willing to risk.

In this case I think its ok to buy the stock if it can retake and hold above $57. However if the stock continues to move lower (below $50) we would not want to be involved until we found another significant area of support.

 The reason I am not currently in this stock is strictly due to my risk tolerance and the near term price action.
The way support and resistance work is a big part of my reasoning here; once price finds a support area and moves higher, it will challenge a resistance zone. If it breaks above that resistance, the resistance will then act as support for the stock in a new, higher price range. This may seem confusing at first, but let me explain with this chart. If you look back at the stock in the middle of 2012, after its long move higher, the price began to flatten out. It was caught under $57, but always seemed to hold up around the $50-$53 area; in this instance $57 was resistance and $50-$53 was support. However, once the price broke above the $57 resistance, it shot up to $73. From a strength perspective we wanted to see the price hold up at $57 if and when people decided to sell; we wanted to see the prior resistance become the new support (this is called "polarity" in Wall Street lingo). As you can see above, the $57 level did act as support for about a month or so, but eventually broke down back below. When this type of price action occurs the support area now becomes resistance again.

 I know, I know, your head is probably spinning a bit! Thats ok, its tricky stuff at first.
Just remember that this is all trading is. Once you figure out how to identify support and resistance areas you will have almost everything you need to make educated, high probability purchases or sales.

This is just the first example of our 10 picks. I am willing to bet that after we cover all 10 stocks, you will have a firm grasp on how to identify support and resistance. Be patient, its a learning process!