U.S. equities mostly moved lower on Wednesday as investors responded to weakness in crude oil, which fell below the $40-a-barrel threshold. Stocks continue to look vulnerable on a technical basis as the rally out of the February 11 low gets overextended.
Catalysts weighing on traders include recent hawkish chatter from Federal Reserve officials increasing the odds of a surprise April rate hike as well as a lack of progress toward an OPEC/Russia supply freeze agreement. A surge in the dollar is unraveling much of the recent strength of commodities and commodities stocks, especially mining names.
For now, I continue to recommend conservative investors move to cash while the more aggressive focus on short-side opportunities such as the following three charts: Newmont Mining Corp (NYSE:NEM), Nike Inc (NYSE:NKE), and Halliburton Company (NYSE:HAL).
Newmont Mining Corp (NEM)
Newmont shares are getting hit by the weakness in gold and silver as hawkish Fed officials dump cold water all over the inflation expectations fueled by last week’s “dovish hold” policy decision. NEM has broken down out of its two-month uptrend and looks set for a return to its 50-day moving average. A drop all the way back to the 200-day average would be worth a 20% decline from here.
The company will next report results on April 20 after the bell. Analysts are looking for earnings of 16 cents per share on revenues of $1.9 billion.
Nike Inc (NKE)
NKE dropped 3.8% on Wednesday after reporting weak Q4 revenues and issuing disappointing fiscal 2017 earnings guidance. Nike turned at resistance near $66 that has been in place since October, now watch for a drop back to the February lows near $54.
Despite higher average selling prices, success in China, and a burgeoning direct-to-consumer business, drags from currency effects, high North America inventories and warehousing costs weighed.
Halliburton Company (HAL)
HAL is challenging its 20-day moving average for the first time since February after being turned away from resistance at its 200-day moving average. With crude oil looking ready for a pullback after an impressive 60%-plus rally off of its Feb. 11 low, oil services stocks like HAL look vulnerable to some profit taking.
The company will next report results on April 25 before the bell. Analysts are looking for earnings of 9 cents per share on revenues of $4.3 billion.
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.
