Allis Chalmers (NYSE:ALY) Continuation Pennant Pattern

Looking at a continuation pennant pattern with Allis Chalmers (NYSE:ALY). Ran off the bottom and succumbed to resistance at the 50MA. Retreated and consolidated. Then, broke 50MA, short trend line forming pennant, and longer trend line. Earnings expected to be released this week (Friday, I believe) -- upward move in July could be speculation on better than expected earnings.

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An Introduction to Dividend Stocks

With global markets and economies still tottering, stocks offering dividends have become an attractive investment. And the truth is, they probably always were. With dividend stocks, investors can look forward to a fixed quarterly payment (typically) as well as any market return the stock may provide. Super low interest rates in bond markets have especially forced fixed income investors to look for their needs elsewhere. Of course, being attached to the stock market, dividend stocks offer more risk than bonds, but many investors are stomaching the higher risk for the higher fixed returns and potential market returns.

When researching dividend paying stocks, an investor must juxtapose the dividend yield as well as the fundamentals of the company. In other words, do not get overly excited over a company offering a 9% dividend yield annually when the fundamentals suggest the company's stock price could drop significantly or the company could decrease the dividend in the near term. One place to start is reviewing the stocks listed on the S&P 500 Dividend Aristocrats, which is an index updated annually (in December) by the S&P 500. In order to be eligible, a stock must satisfy the following criteria:

• Member of the S&P 500 index
• Increased dividends every year for at least 25 consecutive years
• Float adjusted market capitalization of at least US $3 billion (as of the rebalancing reference date)
• Average daily trading volume of at least US $5 million for six months (prior to rebalancing reference date)

The Dividend Aristocrat index also ensures diversification across sectors, which is a huge positive. Most of the higher yielding stocks often are based in the financial or utility sectors, and you can probably imagine that many investors would focus solely on the high yield offered and situate themselves only in these two sectors -- not a good long-term investment strategy.

In the present volatile market, a diverse portfolio of dividend stocks that is able to hold its value and yield a return through the dividend may be just the right investment strategy in these times. In the near future, I will be looking at the strategy of investing in dividend stocks and individual dividend stocks in more detail. Stay tuned.

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