The stock market has exhibited both higher volatility and declining correlations among individual stocks in recent weeks — a boon to traders inclined to take their cues from technical analysis. The past month has brought the arrival of interesting chart formations in technology, retail, and energy, but the opportunities are plentiful even outside of these areas.
Below are ten of the most interesting charts to watch for potential trades in the coming weeks:
Five Stocks for the Bears
Toll Brothers (TOL): Toll, a high-end homebuilder, has already slid 16% in the past three months, but the chart indicates that losses could accelerate unless the stock can hold support at $30. TOL’s chart has a number of bearish elements, including a string of lower highs and a price that’s currently below a sinking 200-day moving average. Look for downside beta in this name if the broader market cracks in the weeks ahead.
Canadian National Railway (CNI): CNI has run out of room to fall. The stock has broken below both its longer-term trendline and 200-day moving average, and it is sitting right at its last line of defense: support at $93. While railroad stocks — especially those already more than 10% off of their highs — aren’t the first sector most traders think of when it comes to short ideas, it will take less than a 1% move to the downside to put CNI into breakdown territory.
Colgate Palmolive (CL): Colgate’s excessive valuation (23.8x trailing earnings, 18.4x forward) finally appears to be taking a toll on its shares. Off 5.2% in the past three months, CL is sitting right at its 200-day moving average and is just above its lower trendline. While shorting this stock is unlikely to provide much juice for traders, its dangerous technical position is an indication that this could be a good spot for longer-term investors to consider lightening up.
Sherwin Williams (SHW): Like Colgate-Palmolive, the combination of an elevated valuation (26x forward, 18x trailing) and weakening technicals put Sherwin Williams in a perilous position here. SHW has already broken below its trendline, and it is perched right at its 200-day MA and a key support level just below $165. If the market experiences one or two more tough days, this former housing-related darling will find itself in a technical no-man’s land:
T. Rowe Price Group (TROW): Similar to CNI, T. Rowe shares are at their last line of defense after violating their 200-day MA and longer-term uptrend. Now, TROW is held up only by support at $70, which — with the stock trading at $70.59 late Wednesday morning — leaves little room before additional downside before it moves into a hazardous position.