The Dow Jones Industrial Average has fallen to test its 50-day moving average on Thursday for the first time since early July, capping a tight consolidation range that has now reached into its third month.
Since the post-Brexit surge out of the late June low sputtered out in the middle of July, nothing much has happened.
But that could be set to change as a number of large-cap stocks test critical resistance and support levels.
With all eyes on Friday’s big non-farm payrolls report — which will impact the odds of possible Federal Reserve interest rate hikes in September and/or December — watch for a possible breakout of volatility in the days to come. If it happens, keep an eye on these three blue-chip stocks.
Blue Chips to Watch: Boeing (BA)
Click to Enlarge Boeing Co (NYSE:BA) stock has been in a holding pattern since March, constrained by overhead resistance near $135 and support near $125.
Over the past few months, support has tightened up to $130, near the 50-day and 200-day moving averages. Shares are testing that support after reports the company won’t raise airplane prices for the first time since the recession due to weak demand.
The company will next report results on Oct. 19 before the bell. Analysts are looking for earnings of $2.67 per share on revenues of $23.7 billion.
I’m looking for a rebound here as the airline order backlog remains strong, with Edge Pro subscribers holding a September call option position.
Blue Chips to Watch: General Electric (GE)
Click to Enlarge General Electric Company (NYSE:GE) shares have been the poster child of the ultra-low volatility trading regime that’s been in place this summer, trading in a tight 50-cent range since the end of July.
A downside breakout appears to be underway on Thursday, with lows not seen since late June being tested.
The company will next report results on Oct. 21 before the bell. Analysts are looking for earnings of 33 cents per share on revenues of $30.1 billion.
Edge Pro subscribers are betting on a breakout of volatility in GE shares, holding a straddle in the Sept $31 options.
Blue Chips to Watch: Disney (DIS)
Click to Enlarge Media giant Walt Disney Co (NYSE:DIS) has had a tough run since peaking in the summer of 2015 on growing concerns about the health of its television business and the success of its movies amid very high expectations.
Despite reporting better-than-expected earnings on Aug. 9, shares have drifted lower and are at risk of violating a support level going all the way back to March.
The company will next report results on Nov. 8 after the close. Analysts are looking for earnings of $1.18 per share on revenues of $13.7 billion.
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.
