U.S. equities were hit hard on Wednesday, overcoming Tuesday’s gains and keeping the Dow Jones Industrial Average below the 18,000 level.
Much of the recent focus has been on disappointing earnings from the retail sector as well as tepid economic data indicating a newly cautious American consumer. Walt Disney Co (NYSE:DIS) also dropped hard on weak media ad revenue. All eyes are now on Friday’s retail sales report for confirmation of consumer-sector weakness.
Until then, keep an eye on these three stocks as stocks remain mired in a three-year trading range: Wal-Mart Stores, Inc. (NYSE:WMT), ConocoPhillips (NYSE:COP) and Apple Inc. (NASDAQ:AAPL).
Wal-Mart Stores, Inc. (WMT)
WMT has been hit in sympathy with the weakness in the broad retail sector. It didn’t help that analysts at RBC Capital Markets rated the stock “underperform” on concerns over increasing competition and consumer shifts to e-commerce outlets like Amazon.com, Inc. (NASDAQ:AMZN).
The stock is at risk of falling below two-month support near $66, which would end the post-November uptrend and resume the long downtrend that started in early 2015.
ConocoPhillips (COP)
COP shares are trying to bounce off of support at the 50-day moving average, continuing a post-February uptrend on optimism that crude oil can continue its recent climb. A combination of supply-side disruptions, as well as a continuing decline in U.S. drilling rig counts, has helped push oil from a low of $26 in February to a high of more than $47 in intraday trading on Wednesday.
If energy is going to keep climbing, COP should easily retake its 200-day moving average.
Apple Inc. (AAPL)
AAPL shares have spent the last few weeks trading dangerously on critical support from the January-February lows as investors remain worried about poor earnings as a result of a first-ever drop in iPhone sales in the first quarter. Recent new products have fallen flat (iPhone SE and smaller iPad Pro). And it looks like the upcoming iPhone 7 launch will merely be yet another refresh of the iPhone 6 form factor.
Watch for a possible breakdown below $90 — which would return shares to levels not seen since early 2014. Edge Pro subscribers just closed a 283% gain in their May $107 AAPL puts.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
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