The year-end trading volume continues to dry up and allow stocks to get pushed around, but there are a few technically driven names that are seeing an opportunity to move higher based on their evolving technical pictures. Today’s three big stock charts look at Tesla Motors Inc (NASDAQ:TSLA), Visa Inc (NYSE:V) and Walt Disney Co (NYSE:DIS), as all three stocks are getting ready to make technically driven moves when the New Year opens for trading.
Tesla Motors Inc (TSLA)
Shares of Tesla are seeing selling today, despite some positive news in the media over the last few days. The TSLA selloff is more attached to the technically oversold signal generated by the recent rally than anything else. That said, the response to this signal is paramount in setting the tone for Tesla’s first-quarter trading direction.
While the recent rally has taken out a few technical trendlines, it has left TSLA open to a reversal as the 200-day moving average is acting out as resistance. This trendline acted as resistance for the shares in November, ultimately sending them tumbling back to the $180-support-level.
In addition, the chart resistance of $220 has continued to build. Tesla traders are familiar with this price point providing reversals as the stock spent an extended period consolidating above $220 in the summer months. A break back below $220 and the 200-day will likely trigger technical selling that moves TSLA shares 10% lower in the first month of the New Year. Upside potential remains if Tesla gets enough buying here to maintain levels above this critical trading zone.
Visa Inc (V)
Visa shares have been worked into a technical corner as they continue to try to muster the strength to move back above the $80-level. The growing problem is that this mark is becoming congested with technical trendlines that are declining to provide resistance for V. The pending Death Cross that will be formed in the next two weeks based on current trends is also concerning for Visa stock.
Since rolling over in October, V stock has been underperforming the market by a wide margin. The bump in consumer optimism seen after the elections didn’t even help the credit card processor to gain traction. Now, Visa stock is facing growing pressure and a likely dip into the lower $70s during the first quarter of 2017.
Staunch pressure from the $80-level on the chart is now even stronger from the 50-day moving average, which has descended to this same price region. The declining 50-day on its own puts V stock in an intermediate-term bearish category.
By our model’s estimates, we will see a Death Cross on Visa stock in the next two weeks when the 50-day moving average crosses below the 200-day. This is more of a headline-grabber than a reliable signal, but it will drive home short-term selling.
For now, traders are better off watching for the next meaningful dip to buy shares of V, or moving on to another processor in the same sector.
Walt Disney Co (DIS)
Disney shares have been one of the better performers in the Consumer Discretionary sector as they have shot 15% higher since November. Now, DIS stock is pulling back from overbought signals, but the move appears to be nothing more than a rest ahead of the next rally.
Looking at the trendline analysis, Disney has successfully transitioned into intermediate-term bullish conditions as of Dec. 7, and has improved the breadth of the move.
The current pullback is a “healthy” correction as DIS shares moved too far, too fast. This means that the profit-takers are sending shares lower right now, and it’s not a change in the money flow into the Disney stock. Given that DIS shares boast a 1.5% dividend, they aren’t going to get tangled-up in the interest rate risk trade as the Ten Year Treasury Yield continues to push higher. Instead, Disney provides average dividend yield potential along with growth — a good combination for the current market.
Watch for DIS shares to test the $100 to $102-range on prices if the selling pressure picks up, but this is where we’re more likely to see technical traders start to pick up on the opportunity for the shares to set forth on their next rally.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
