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In this season many pundits seem ready to list their favoured stocks for the coming year regardless of the market backdrop.

However, flicking through the charts this past week, it became fairly obvious that most stocks are either heading south or look very susceptible to weakness. So finding stocks that might merit consideration from a buying standpoint is hard, as they must be expected to buck the general trend.

As this column champions a technical approach, I am looking for telltale patterns that hint at upside potential. I hope to find these signs early enough in the life-cycle of a trend or run so as to provide a buyer with a reasonable reward-to-risk profile.

So, although the logical and easier stance might be to go with the flow and hunt for stocks that look like they are about to drop off a precipice, in the interests of those who prefer to buy rather than short, here are three stocks that might just fit the bill.

Corac (CRA:AIM)

This year could be a milestone for the designer of down-the-hole gas compressors that offer the possibility to significantly extend the productive life of gas fields. As with all ‘developing technology’ situations, things seem to move too slowly for the City, yet the chart shows the shares have doggedly bucked the influence of the weak market and remained relatively strong over the past six months. A clear long-term upward channel has been influential for five years, and a secondary shorter-term bull channel can now also be drawn in. Lately, resistance at 60p has limited the upside while support close to 50p has protected the downside. Look for a move above 60p to generate gains quickly to 80p via the minor channel top line at 70p currently. The major channel top is presently rising through 93p.

BUY at 56.5p • Stop Loss 48p • Target 80p

European Nickel (ENK:AIM)

Nickel is potentially an opportunity given the seemingly insatiable appetite of Asian markets for commodities, particularly those in short supply. The chart shows this stock might not be for widows and orphans, as last year it rose by more than 55%, then fell by the same percentage before closing the year a net 24% to the good. If nothing else it offered volatility. The sell-off generated a spike low and in doing so will no doubt have shaken weak holders out. The speed with which the subsequent recovery took hold points to underlying strength, as does rising momentum, and there is now a prospect of an inverse head-and-shoulders pattern, which would be confirmed by a move above 55p, and would then point to a target of 80p. All bets would be off, however, if the shares fell below congestive support close to 40p.

BUY at 49.5p • Stop Loss 39p • Target 80p

Lonrho (LONR:AIM)

One reason I like this stock is its exposure to Africa, which, despite the current instability in Kenya, seems to be progressing commercially. Chart-wise, the large saucer-shaped bottom formation of 2000-2006 heralded a long-term change in the market’s stance. The sideways correction, of H2 2006 and the early part of last year, has allowed a bull trendline to be drawn in, offering potential future support to any weakness, and it coincides with the rising 200-day average currently near 39p, which would also be expected to support. Recent price action has remained positive and is pressuring congestive resistance near 49p. A move above this would focus on 70p via 63p. Lastly, look at the past two years’ spikes in volume. The first signalled the rise from 13p at the end of 2005 and the second in mid-October last year only generated a sideways consolidation. From a chart perspective the market seems unready to sell this stock, probably the reverse.

BUY at 49p • Stop Loss 41.5p • Target 70p