Stocks spent the day surging higher on Friday as Deutsche Bank AG (USA) (NYSE:DB) shares led an end-of-quarter rally on relatively average volume, considering that there was some “windows dressing” going on. This morning’s headlines are rich with trading fodder for both the bulls and the bears as the market heads into what is likely to be another volatile ride.
Today’s Three Big Stock Charts focuses on three stocks in that are currently in the news. For the bulls, we’ll take a look at Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and then two stocks for the bears, Wells Fargo & Co (NYSE:WFC) and Tesla Motors Inc (NASDAQ:TSLA).
Alphabet Inc (GOOG)
All of the attention of the technology sector is placed on Amazon.com, Inc. (NASDAQ:AMZN) as it pushes to new all-time highs: the company is up more than 23% for the year and isn’t running out of steam. Of course, shares of Alphabet are also moving towards new high territory and no one is paying any attention — something we like to see.
GOOG shares have been consolidating at the $775 level since August and have held some relative strength against the rest of the market. The consolidation has allowed Alphabet’s 50-day moving average to slip under current prices and provide potential support.
This consolidation has also resulted in the momentum indicators turning positive on GOOG shares at the same time that the RSI readings are firmly entrenched in the middle of their range. This suggests to traders that they may have a technical value play in Alphabet shares for the short-term.
Finally, GOOG will offer its earnings results on Oct. 27. Recent trends have seen Alphabet shares rally into the earnings announcement and a similar scenario this month could lead to a “buy the rumor” situation, as the company’s last report was a positive catalyst for GOOG shares.
Wells Fargo & Co (WFC)
This will be the second time in a week that we’ve covered Wells Fargo stock, but from the technical perspective, it is worthy of the coverage. Two weeks ago, we drew a line in the sand at the $45 level as the company’s CEO was preparing to testify to Congress. We pointed out that WFC shares were ripe for a “dead cat bounce” and that’s exactly what the market saw as Wells Fargo traded back up to $47.
Now, WFC shares have fallen back into the hands of the sellers as they reversed at $47 and have now broken key support at $45. One potential catalyst for the next step lower is the fact that we’ve only seen one downgrade from analysts on Wells Fargo stock in the last three months. Given the continued headline risk, it is likely that we will see some analysts reassess their outlooks and potentially lower ratings.
WFC stock’s next target to the downside is $40, which offers support from being a round number along with historical chart support as well.
Tesla Motors Inc (TSLA)
Tesla is in the news today after news that its deliveries were much higher than expected. TSLA shares opened above $210, higher by 4%. Tesla stock has turned into a favorite for the traders, which means that they have become more sensitive to the technicals and less sensitive to fundamentals.
The technicals show some serious overhead resistance for TSLA at the $215 level. Currently, this price marks the confluence of Tesla’s 50- and 200-day moving averages, which are both trending lower. The combination of these bearish trendlines at the $215 mark should signal an opportunity for those that have been trading the stock’s range to close-out profits and potentially take short positions.
Finally, a look at the price channels for TSLA shares shows that the channel that has developed since the April highs intersects with the trendline resistance at $215, putting even more potential pressure on Tesla shares to recede from this price. For now, the bears look to be in charge of TSLA stock, despite the positive news.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
