Pullbacks present opportunities to enter uptrends. There are no guarantees in trading, and it is possible that a pullback can extend beyond anticipated support levels, yet trading with the trend is one of the most effective methods traders have. These two stocks and two REITs are in long-term uptrends and pulling back to support, offering a buying opportunity for those who believe the uptrend still has legs.

Norfolk Southern Corp. (NSC) is in a long-term uptrend and since November has been respecting a rising trendline. After moving through $100 in May the stock is once again coming back to the test area. Psychologically the area is important, but also intersects with the rising trendline. Support is between $98 and $95, offering an entry point for those who believe the uptrend will continue. Stop losses can be placed below the April low at $91.91. If the uptrend continues, price targets should be above $109. (For more on this topic, see: Stocks With The Strongest Uptrends.)

CenterPoint Energy Inc. (CNP) has been ranging between $22.22 and $25.75 (unadjusted) since early 2013. The price has been channeling higher in 2014, and that channel provides supports in the $24 region (For more on this topic, see: Channeling: Charting A Path To Success). Whether this channel will continue is questionable. Over the last 18 months the price has made multiple attempts to climb above the range high, and keep progressing, but has been unable to do so. Buying near $24 does present a reasonable entry, though, as a stop can be placed below $23.30, keeping risk fairly light. It also allows long-term upside potential if the stock does break above the range. The stock also has a 3.9% dividend yield which makes it more tolerable to hold if the breakout is slow to develop or fails to materialize. (For related reading, see: Follow These 4 Large-Cap Market-beating Stocks.)

Diamond Hospitality Co. (DRH), a motel/hotel REIT, is also in a well-defined trend channel higher. Channel support comes in between $12 and $11.75 providing a buy zone with a stop below $11.40. Target is the top of the channel between $13 and $13.25, or potentially higher if held for the long term. This stock also has a nice dividend yield at 3.3%, so holding the stock for a bigger gain — as long as it stays above channel support going forward — isn't a bad idea. (For related reading, see: What Are The Best Real Estate REIT ETFs?)

Since the start of 2014 Equity Residential (EQR) has broken its year-and-a-half downtrend and rallied within a well defined upward trend channel. Channel support is at $63.30 through to $62.75, with additional support in the $61.80 region. Both areas provide potential entry points, with stops a little more than one dollar below the entry price. Target is the top of the channel, from $67 to $67.75. Once again there is the potential for a longer-term uptrend to be underway. For those who want to hold for longer, assuming the uptrend remains in tact, the stock offers a 3.1% dividend yield. (For more on this topic, see: Invest In REITs With This ETF.)

The Bottom Line

The recent pullback in broad indexes such as the S&P 500 have created buying opportunities in many stocks. Eventually, the trend will break and a larger correction will ensue. Trying to predict which pullback that will be is a difficult task, though. Trend traders trade a trend until it reverses, and these stocks haven't reversed. A trend can break at any time, that's why using a stop loss is important. The trends provide a potential reward greater than the risk, and as long as the trend remains up, the dividend yields provide additional incentive to stay long until the market says to do otherwise. (For related reading, see: How To Trade Credit Card Stocks.)

Cory Mitchell does not own or have interests in any of the stocks mentioned in this article.

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