3 Big Chart Stocks for Friday: Oracle Corporation (ORCL), salesforce.com, inc. (CRM) and AbbVie Inc (ABBV)

Advertisement

Could it be that the market is really ready to take the break that it has been due for months? With almost 50 days in a row without a 1% move in the S&P 500 Index (either up or down), the consolidation that we’ve seen last most of the summer is well beyond due for a volatility move. Historically, the index goes an average of fewer than 10 days between 1% moves.

We’ve been highlighting stocks that have been breaking higher during the consolidation, but today we’ll take a look at three companies that are making early moves to break lower that may be leading the market lower over the next few weeks. The three stock on the breakdown radar are Oracle Corporation (NYSE:ORCL), salesforce.com, inc. (NYSE:CRM) and AbbVie Inc (NYSE:ABBV).

Oracle Corporation (ORCL)

160909 ORCL Stock Price
Source: Chart courtesy of StockCharts.com

Oracle shares slumped yesterday on an analyst downgrade one week before earnings results are set to hit the tape. The downgrade dropped shares below their 20- and 50-day moving averages on the same day, two trendlines that the stock has desperately been trying to hold on to for support.

In addition to the break below trendline support, ORCL shares 1.3% move is the first volatility move after a long period of consolidation that dates back to July 22. The sudden volatility and downgrade ahead of next week’s earnings will trigger a “sell the rumor” situation for ORCL stock that is likely to take shares lower.

Oracle’s one-day move breached the stock’s lower Bollinger Band that had been tight based on the recent lack of volatility.The break suggests that we will see an aggressive move to the downside as volatility in ORCL returns to normal levels with an increase in selling.

salesforce.com, inc. (CRM)

160909 CRM Stock Price
Source: Chart courtesy of StockCharts.com

Salesforce shares started playing the volatility game last week when the stock broke below its lower Bollinger Band last week, kicking off a round of selling that has now set a negative momentum trend for CRM stock.

The volatility move has now affected the stock more negatively with a break below its long-term 200-day moving average. The last time that salesforce shares broke below this trendline was in January 2016, just ahead of a 25% decline in the stock.

Finally, a break below $74.20 will put CRM shares back in a technical bear market, as this would move the stock below its 20-month moving average. With momentum shifting even more negative on rising volume, salesforce shares are in clear danger of having shifted into an bearish trend that would likely carry CRM stock to $66.

AbbVie Inc (ABBV)

160909 ABBV Stock Price
Source: Chart courtesy of StockCharts.com

AbbVie and other biotechnology stocks have been down in sympathy of Mylan NV (NASDAQ:MYL) over the past two weeks, but the selling is building more momentum as volume on AbbVie’s decline has been building.

ABBV shares were able to catch support at their 50-day moving average until yesterday when an increased volume trading day broke the stock back below its 50-day for the second time in a week. Some of the support seen over the past week was also due to the stock having traced itself into an oversold technical condition, however the resulting strength appears to have been more of a “dead cat bounce” than a true bullish signal.

Within a few days AbbVie’s 20-day moving average will cross below its 50-day trendline. Two of the last three similar patterns have resulted in declines in Abbvie stock of more than ten percent as this pattern indicates a bearish shift in the stock’s trend.

For now, traders are likely to continue to build selling pressure on ABBV shares, moving them toward their likely support level of $60, which is where we would start considering the shares a technical buy.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/09/big-stock-charts-orcl-crm-abbv/.

©2024 InvestorPlace Media, LLC