The market will spend much of this Friday digesting the latest jobs report and its implications on the upcoming interest rate decision. While this isn’t time wasted, the technical analysts and chart watchers are getting much clearer signals from the techicals on a growing number of stocks as the fundamental picture for the market continues to become less clear.
Today’s Three Big Stock Charts looks at a familiar name that we covered as a short-term bull last week, but it has transitioned right into a bearish trade: Chesapeake Energy Corporation (NYSE:CHK). We also examine other bearish charts for AstraZeneca plc (ADR) (NYSE:AZN) and Groupon Inc (NASDAQ:GRPN).
Chesapeake Energy Corporation (CHK)
The technical traders are loving Chesapeake Energy right now, as it has been playing to the trendlines like it was following a map. Last week, the CHK charts suggested that a technical bounce was due as the stock had disengaged from oil prices and found support at its 50-day average. The results? A 12% rally over four days that is now running into resistance.
The traders are going to be sellers of Chesapeake Energy shares now, as the 20-day moving average, which is rolling over, is providing resistance just below $7. That and the round-number resistance of $7 should be enough to get profit takers selling CHK stock, setting a course for $6 again, where we’re likely to see support try to hold shares from further declines.
A break of the $6 mark may actually see Chesapeake Energy decline to $5, which would activate support from the 200-day and turn CHK stock into a strong technical buy.
AstraZeneca plc (ADR) (AZN)
Pharmaceuticals have been gaining strength lately along with the biotechnology sector. Despite that, AstraZeneca shares have lagged the sector as well as the market. Lagging AZN shares are now challenging serious chart support at the $32 level, which will determine the next 5% to 10%.
The $32 level has held AstraZeneca from further declines since AZN stock gapped above it after its last earnings report in July. The retracement and repeated tests of this strong price support suggests that we will see a break ahead of the company’s next report later this month.
Chart watchers will focus on the $31 level as a buying opportunity for AstraZeneca, as this is the site of the 200-day trendline, but $30 is a real possibility as AZN stock is gaining downside momentum, which is indicated by the rollover in trendlines and the MACD.
Groupon Inc (GRPN)
After coming back to life following its last earnings report, Groupon shares are coming back to earth ahead of the next report. This could result in one of those precious “sell the rumor, but the news” situations that are so profitable in the earnings season. Before that though, the GRPN technicals are suggesting that there is another decline in the works.
Groupon shares just saw their 20-day moving average cross below their 50-day trendline, an indication that GRPN stock’s trend is transitioning into an intermediate-term bearish mode. This is occurring as the stock is testing the $5.00 level, which will absolutely try to act as chart support due to its round-number quality and the fact that Groupon stock is priced in single-digits.
The chart and momentum suggest that GRPN shares will likely break this $5 mark within the next week and target a selloff to $4.50. Groupon stock has long-term support at $4.00 if the decline extends itself further, which would turn the shares into a technical buy.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
