Trades and investors appear unwilling to take big steps in front of Friday’s speech from Janet Yellen in Jackson Hole, as interest rates have once again risen to the top of everyone’s list of potential concerns for the markets.
This, of course, does not affect the technical traders which are still plentiful and productive. Today’s Big Three Stock Charts cover two bears and a bull with the United States Oil Fund LP (ETF) (NYSEARCA:USO), Sirius XM Holdings Inc. (NASDAQ:SIRI) and Valeant Pharmaceuticals Intl Inc (NYSE:VRX)
United States Oil Fund LP (ETF) (USO)
The crude oil trade has been helped higher by rumors of cuts to production that appear to be nothing more than that — rumors. The drive higher in prices has put USO on bearish traders’ radars as it appears the intermediate-term trend is reversing at the end of the seasonally strong summer.
United States Oil Fund shares extended themselves into a technical danger zone last week as the ETF tried, unsuccessfully, to break above their top Bollinger Band. The failure indicates that we’re likely to see a regression to the mean prices of about $10.
Additionally, of course, the shares hit a technically overbought signal on increased volume, signaling the last push of buying for the shares before a decline. The last similar signal happened in Early June ahead of the decline from $12.50 to $11, followed by a longer-term decline to $9.25.
For now, the sellers should take charge of United States Oil Fund while the technical rally unwinds a bit.
Sirius XM Holdings Inc. (SIRI)
Shares of the satellite broadcaster got a boost after their earnings release in July, but have staggered sideways since. The consolidation is shares price should have technical traders taking some note as the stock appears to be ready to push lower.
News that the institutional crowd is beginning to cut positions in SIRI is adding some selling pressure to a stock that has been able to maintain a low-volatility long-term bullish trend. The recent reversal after earnings places Sirius shares at the $4.20 level, which is the site of significant chart support. A break below this mark will draw more technical sellers into the market.
Momentum on Sirius shares has been on the decline and heading for negative territory as the daily volume is on the rise. This indicates that sellers are beginning to target Sirius shares and drawing profits.
Intermediate-term support for the shares lies at the stock’s 200-day moving average, currently at $3.95, which will represent an 8% move from its current price and almost a 20% correction from its recent highs. At that level, Sirius turns back into a buy for the technical traders, until then, hands off.
Valeant Pharmaceuticals Intl Inc (VRX)
Valeant remains in the daily news cycle since its positive earnings release earlier in the month. VRX is seeing a number of upgrades and reiterated buy recommendations as the stock chart is finally gaining some traction and appears ready to continue on a breakout, despite short-term overbought conditions.
Valeant shares have now broken above their top Bollinger Band, indicating that the stock is likely to continue its current breakneck rally as investors and traders are now piling onto the buying bandwagon.
Volume, while volatile, is increasing, confirming that the crowd now has control of the stock, which is a good thing.
Momentum on Valeant shares has moved into positive territory and there is a lot of negative sentiment towards the shares that remains to be “unwound.” This indicates that we should see a continuation in the fast-moving rally with a target as high as $47, the site of its first long-term technical hurdle, over the long-term as this recover story continues.
As of this writing, the Johnson Research Group did not hold any of the aforementioned securities.
