3 Big Stock Charts for Wednesday: UnitedHealth Group Inc (UNH), Marathon Petroleum Corp (MPC) and Kellogg Company (K)

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The day starts with another mediocre open, despite the continuation of the relief rally overseas. The market is still searching for some direction as a crosscurrent of buying and selling is starting to make traders feel like the holiday rally is nearing its end. One source of trading catalysts provided some activity in the charts today as we’ve seen three analyst recommendation changes that are timed well.

UnitedHealth Group Inc (NYSE:UNH) and Marathon Petroleum Corp (NYSE:MPC) have both seen upgrades to their shares issued this morning. The upgrades should help act as a catalyst for these shares as they are already in technically healthy patterns. On the other side of the tab, Kellogg Company (NYSE:K) was downgraded overnight, suggesting that the unfriendly trend is likely to continue.

UnitedHealth Group Inc (UNH)

161207 UNH Price Chart
Source: Chart courtesy of StockCharts.com

Health care companies have been lagging the market since the latest rally began. Now that we’re beginning to see some formation of the Trump Administration, investors are moving back into some of these stocks. UnitedHealthcare took a boost last week and broke from its ranged consolidation.  Now UNH shares are signaling a new trend.

The break above $45 took UnitedHealthcare shares into a short-term overbought condition that quickly worked its way off. Now, with room to move higher and trading volume on the rise, UNH shares are targeting a move likely to the $55-level.

This morning, UnitedHealthcare shares received a vote of confidence as Cantor Fitzgerald upgraded the stock from a hold to a buy. This is likely to push UNH shares towards their next resistance level of $50.

Technical support lies in wait at the $46- and $44-levels from UnitedHealthcare shares 20- and 50-day moving averages, both of which are trending higher.

The strong technical chart and upgrade of the shares should move UNH higher over the intermediate-term outlook.

Marathon Petroleum Corp (MPC)

161207 MPC Price Chart
Source: Chart courtesy of StockCharts.com

Energy companies continue to wrestle with daily activity and the volatility in the oil pits. But larger oil companies continue to benefit from the outlook for higher oil prices, despite the current volatility.  Marathon Petroleum is one of those as the shares are now leaving other oil companies in the dust.

MPC shares recently broke out of their own consolidation and initiated a new bullish trend as the 20- and 50-day moving averages are now trending higher. From a longer-term perspective, the month of December now marks the second month of trading above the stock’s 20-month moving average, putting it in a long-term bull market.

This morning, Marathon received an upgrade from JP Morgan, going from neutral to overweight.  As with UNH, we expect MPC to get a bump from this activity, as those following the recommendations on Wall Street will move into the shares as buyers over the next week or so.

As Marathon stock is teetering in overbought territory, we do see a small risk of a short-term pullback in shares. This would target the $44-price-level’s support and offer a buying opportunity for those looking to act on the upgrade of MPC. Otherwise, the break above the $50-level, which shows chart support and resistance, will be the next catalyst for a 5% to 10% move in Marathon Petroleum.

Kellogg Company (K)

161207 K Price Chart
Source: Chart courtesy of StockCharts.com

Consumer Staples companies continue to see selling pressure as dividends become less attractive in a rising interest rate environment. Kellogg is in the higher-end of the dividend yielders in the group, positing a near-3% dividend based on current prices.

K shares have been on a slide since August earnings, when revenue was lower than expected, despite a bottom-line beat. The questioning of Kellogg’s fundamentals along with pressure on dividend yielders are beginning to increase, as the Federal Open Market Committee clarified that rates would move higher. This was too much for K shares, which slipped into an intermediate-term bear trend.

Recently, Kellogg shares moved below the $73-level, which is the site of the stock’s 20-month moving average. This now breaks K’s shares into a long-term bear market trend, which will add more selling pressure to the stock.

Finally, an analyst downgrade from Credit Suisse will start putting Kellogg stock in the crosshairs of the slower moving fundamental crowd, meaning that we should see another wave as this critical technical gives way.

K stock chart watchers should eye the $73-level for resistance on any rally and expect that the cereal giant will continue its slide as long as the intermediate-term trends are inverted.

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/2016/12/3-big-stock-charts-for-wednesday-unitedhealth-group-inc-unh-marathon-petroleum-corp-mpc-and-kellogg-company-k/.

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