Coca-Cola (KO), which is sitting right at its 200-day and is less than a dollar away from its lower trendline at $38.50, is coming close to worrisome territory — particularly in light of the fact that the stock is trading at a hefty forward P/E of 17.4:
Exxon Mobil (XOM) has weakened after its soft second-quarter earnings report, and yesterday it crossed below its 200-day MA. Alone, a break of the 200-day hasn’t been a reliable signal for XOM, but the stock also is approaching a two-year lower trendline (currently at $88.75) as well as another trendline that dates back to mid-2010 (currently at $86.10). This indicates the stock has little margin for error remaining before it begins to sustain meaningful technical damage.
Walmart (WMT) still has plenty of cushion before it reaches a breakdown point, but it’s close enough that it warrants attention. Those who own the stock, and who have a shorter-term inclination, should consider setting stops where the 200-day and two-year trendline intersect, at roughly $73.70.
The Broader Implications
With three big names from diverse sectors already having broken down, and three more coming close, is there a message here regarding the broader market?
That doesn’t appear to be the case — the S&P 500 is still far away from either its 200-day or its lower trendlines, as are the mid- and small-cap indices.
For now, then, consider these charts to be a signal for trading these six individual names rather than a signal about overall market conditions.
As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.