5 Blue Chips That Are Standing on Weak Legs

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Stocks are rolling over again on Friday after a larger-than-expected drop in the unemployment rate increased the odds of a September interest rate hike from the Federal Reserve — which, if it happened, would be the first such move since 2006.

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Technically, the Dow Jones Industrial Average index of blue chips bonked its head on its 38% Fibonacci retracement level and now looks set for another move below the psychologically important 16,000 level.

If the May 2010 “flash crash” is any guide, the Aug. 24 “Black Monday” lows should be exceeded in the coming weeks as the market tries to scare the Fed out of tightening monetary policy.

With that in mind, here are five popular blue chips set to weaken in the downdraft.

Weakening Blue Chips: Apple (AAPL)

Weakening Blue Chips: Apple (AAPL)

Heading into the Sept. 9 product unveiling — with the iPhone 6 and iPad refreshes on deck as well as an update to the Apple TV streaming box — questions still hang over Apple (AAPL) shares on the company’s success in China and its ability to overcome tough year-over-year comparisons to the successful iPhone 6 launch last year.

The odd “China is great!” email from CEO Tim Cook to CNBC stock jockey Jim Cramer has also yet to be explained — and may have been done in violation of disclosure regulations.

Weakening Blue Chips: Bank of America (BAC)

Weakening Blue Chips: Bank of America (BAC)Bank of America (BAC) shares look set to drop out of their two-week trading range in a setup to test the January-February lows near $15 a share.

The Sep $16.50 BAC puts recommended to Edge Pro subscribers are carrying a gain of nearly 80% already — with room for much more.

Weakening Blue Chips: Johnson & Johnson (JNJ)

Weakening Blue Chips: Johnson & Johnson (JNJ)

After breaking down out of a tight trading range near the $98 level, Johnson & Johnson (JNJ) shares are on the slide again and look set for a break below the $90 level — with an air pocket all the way down to its Black Monday flash-crash low of less than $82 — as one of the bull’s momentum favorites of the last few years loses its head of stream.

On July 14, the company reported a 8.8% year-over-year decline in quarterly revenue.

Edge Pro subscribers are enjoying a 5% gain on their Sep $92.50 JNJ puts.

Weakening Blue Chips: Microsoft (MSFT)

Weakening Blue Chips: Microsoft (MSFT)

With the Windows 10 roll-up behind it, and confusion reigning on what its mobile strategy is exactly, Microsoft (MSFT) shares are drifting lower again.

As it stands, Microsoft appears to be setting up another retest of the $40 level that has acted as support all year long.

Weakening Blue Chips: Wells Fargo (WFC)

Weakening Blue Chips: Wells Fargo (WFC)Wells Fargo (WFC) shares are getting hit along with many Wall Street names as market volatility is set to eat into investment banking revenues for the third quarter.

If the bulls can’t stop the slide at $50, a test of the flash-crash lows below $48 a share look likely.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/5-blue-chips-weak/.

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