3 Big Stock Charts: United States Steel Corporation (X), Chipotle Mexican Grill, Inc. (CMG) and Costco Wholesale Corporation (COST)

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A day up, a day down. That’s the pattern that the market feels like it is settling into as the nearing election has money managers and retail investors sidelining themselves and only taking advantage of clearer opportunities.

This is the main reason that we watch the technicals and the charts, because the numbers don’t lie and they often rise above the noise of politics and other superfluous events to reveal continued opportunities.

This morning’s big stock charts looks at United States Steel Corporation (NYSE:X), Chipotle Mexican Grill, Inc. (NYSE:CMG) and Costco Wholesale Corporation (NASDAQ:COST) as two bulls and a bear, at least from the trading perspective.

United States Steel Corporation (X)

161017 X Price Chart
Source: Chart courtesy of StockCharts.com

Covered bullishly in Barron’s over the weekend, United States Steel is likely to gain some traction, not only from the positive publicity, but also from its chart.

Most wouldn’t know it, but United States Steel stock is trading 107% higher year-to-date, putting it near the top of underappreciated over-performers. In other words, the stock has been knocking the cover off the ball and no one is paying attention. This is usually a recipe for a bullish rally. Now that the crowd is aware of the performance by the coverage in Barron’s, we should expect to see some renewed interest in X stock.

Shares of United States Steel just finished a bounce from their 200-day moving average, putting them on a technical buy list. Everything is not rosy, though. The shares’ 50-day trendline is descending toward current prices and could add some overhead resistance.

The battle will occur at $18, likely in the next week or so. The company has an earnings report that will hit the tape on Nov. 1. Considering past performance, we expect to see some buying ahead of the announcement, which will help to crack the technical resistance at $18.

As a bonus, only 33% of the analysts covering United States Steel stock have it ranked a “buy.” This weekend’s article, and any positive earnings results, will force upgrades and help the technical buyers.

Chipotle Mexican Grill, Inc. (CMG)

161017 CMG Price Chart
Source: Chart courtesy of StockCharts.com

A year later and Chipotle is still trying to get everyone back into their stores. So far, the numbers have failed to bring the slower moving fundamental analysis investors back into the market, but the technical traders are having a ball with Chipotle shares.

Why are the techies having fun? Because Chipotle keeps trading these little 5% to 10% range moves that are more predictable than a stop on the Acela Express between Grand Central and Washington D.C.

The latest in the moves is the decline to $400 that is preparing to trigger an oversold signal on Chipotle’s RSI. This round-number support along with the technically oversold status will create just the right vacuum of selling pressure needed for the stock to reverse itself again on the slightest buying interest. And then the cycle starts again.

Chipotle has an earnings report coming up next Tuesday, which will have an obvious directional bias on the stock, for that reason we will be checking in on the trade Monday morning, but for now, the charts are pointing to a move to $410 as buyers get back into the market.

Sidenote, the Street is just waiting for this stock to return to its glory, so any glimmer of hope will get these shares running higher. There is a large chance that the next week could also be driven by the “buy the rumor” investors that don’t want to miss out on the potential that Chipotle gaps higher after next week’s earnings.

Costco Wholesale Corporation (COST)

161017 COST Price Chart
Source: Chart courtesy of StockCharts.com

We love Costco, the retailer and the stores. The stock? Meh.

Last week, the FOMC stated that the economy was set to grow on consumer strength. We’ve been watching the retail sector, hard lately, and it doesn’t appear to be happening yet. The holiday season is kicking off already with displays and sales offers already being floated to consumers, but the season may be wearing out its welcome more each year as retailers push us into the mood earlier and earlier. That has nothing to do with the chart, though, so let’s look at it!

Costco’s shares look like a windsock at the airport, when there’s just no wind. A consolidation at the $150 level after the 10% decline from August highs has little to no interest from the technical community as volume has remained low and momentum has failed to build. This stock chart has flat-lined for now.

Putting in more danger is the fact that Costco shares are now trading below their 20-month moving average, the line of demarcation between bull and bear markets for stocks. This puts more pressure on the $150 level to hold as this is the site of the aforementioned 20-month.

161017 COST Monthly Price Chart
Source: Chart courtesy of StockCharts.com

We’ve not seen any interest from the analyst crowd as those with buy recommendations have slowly reiterated and we’ve not seen any upgrades from analysts to “buy the dip.”

With earnings on Costco not due until the end of the season that just kicked off, the monthly sales numbers are the only potential catalyst for move and these have been lackluster.

In summary, the chart for Costco shares has more downside potential than upside with a move to $140 likely given the shift in trends in the technicals.

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

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Article printed from InvestorPlace Media, https://investorplace.com/2016/10/three-big-stock-charts-monday-united-states-steel-corporation-x-chipotle-mexican-grill-inc-cmg-costco-wholesale-corporation-cost/.

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