News that the FBI will not be recommending charges against Hillary Clinton, again, are bringing the bulls back to The Street. The reduction of election-related volatility has traders in a buying mood this morning.
As always, we’re more interested in what the charts are showing us for opportunities as they tend to filter out some of the headline noise and get right to the facts.
Visa Inc (NYSE:V), Boeing Co (NYSE:BA) and Tripadvisor Inc (NASDAQ:TRIP) are among the stocks that have been able to remain relative strength leaders, suggesting that their recent declines are offering traders an opportunity to jump in ahead of any post-elections rally that may kick-off.
Visa Inc (V)
Despite some slowdowns in retail and consumer discretionary spending, payment processor Visa and other electronic payment companies have maintained their strength as revenue and earnings figures for the quarter showed stronger-than-expected performance.
Last week’s decline took Visa shares back to the $80 level, which is the site of chart support and the stock’s 100-day moving average. Shares have been slow to move from a trading range that initiated in September, however the short-term chart appears ready to bring some change.
Visa shares are close to triggering a short-term oversold condition after last week’s seeing. That, along with the trendline support and round-numbered support, suggests that the stock is set for a short-term bullish run of 5% or better.
Boeing Co (BA)
Like many stocks, Boeing Co shares have pulled back to their pre-earnings levels in declining 4% last week. This means that you can now buy the stock as if you knew the earnings results that drove a 4% rally.
In other words, now that the sell the news traders are out of the way it’s time to step in and benefit from that earnings beat.
We expected to see some overhead pressure from the $150 level on Boeing as this represents the highs from earlier this year. The market pressure from the uncertainty of the elections helped to expedite the pullback and offer a trading opportunity to the bulls.
Boeing is also one of those stocks that are more likely to benefit from a win from either of the presidential candidates, as industrial and military spending are likely to rise under either administration.
From a longer-term perspective, traders will identify the very expanded head-and-shoulders pattern that has been forming monthly since December 2013. This is similar to the pattern that formed from April 2004 through May of 2008, a pattern than gave way to a 50% decline in Boeing share value.
The long-term bears are watching closely, but the short-term traders are seeing opportunities for Boeing.
Tripadvisor Inc. (TRIP)
Tripadvisor shares are prepping for a breakout that is likely to see them make a run at the $70 price. The stock has spent the last three months consolidating between the $60 and $63 prices and is now gaining momentum as it heads towards the top of the range and a potential breakout.
What makes the breakout more interesting is the high level of short interest that has built-up on Tripadvisor shares as the short sellers have been increasing their bets against the stock. This sets the shares up for a potential short squeeze that will help fuel the move to $70.
Also coming to the rally is a strengthening trend in the shares. Recently, the 50-day moving average began to shift into an ascending pattern, which is bullish for the short- and intermediate-term outlooks of the shares. The consolidation has also caused a confluence of technical trendlines at the $64 that once broke above will turn into technical trenline support.
Building momentum and a potential short squeeze strengthen the chart trade for Tripadvisor and line it up for what is likely to be a 7% rally higher over the short-term.
As of this writing, the Johnson Research Group did not hold a position in any of the aforementioned securities.
