Stocks started to hit some turbulence on Thursday as energy, interest rates and the possibility that the market could see a “Trump Correction” after the inauguration all weigh on investors’ minds. The weakness in the market is hitting Basic Materials and other sectors that saw strong rallies after the Trump victory, while sparing many technology and consumer staples companies that have lagged the market since November.
Today’s three big stock charts look at AK Steel Holding Corporation (NYSE:AKS), Amazon.com, Inc. (NASDAQ:AMZN) and Kraft Heinz Co (NASDAQ:KHC), all at potential short-term tradable points on their relative charts.
AK Steel Holding Corporation (AKS)
AK Steel shares are trading 9% lower as they hover below the $10-level. This round-numbered price level will likely provide some support for AKS as it did in early December after a breakneck speed rally.
AK Steel shares are well off their overbought readings, indicating that AKS stock is not likely to see additional pressure due to sitting in the thin air of a fast and aggressive rally. Instead, AK Steel stock is now seeing a shift in the momentum that drove it higher that now poses a risk.
Momentum over the short-term is shifting from a consolidation to an increased risk of a declining trend. Given the 90% gains that the AKS still holds from the beginning of the November rally, it is likely that we are still going to see profiteering take its shares even lower.
For now, the bulls should wait for an oversold signal from the RSI to indicate that a selling vacuum has been created and that AK Steel shares are more likely to see at minimum a “dead cat bounce”. Our estimation is that a decline of $.60 to $.75 will register that reading. Until then, wait on AKS.
Amazon.com, Inc. (AMZN)
We’re hoping that you don’t bore of reading about Amazon shares since the stock keeps making technical moves that are worthy of your attention.
We’ve pointed out the importance of the current price trend holding and talking out the psychologically important $800-mark. AMZN stock is moving higher today as news from the Needham conference reflects well on the company’s outlook.
The technical strength of Amazon stock moving above the $800 should not be lost on traders, including those of us that have maintained an intermediate-term bearish outlook on AMZN stock.
Two Closes (Today and Friday) above this mark will start building pressure for Amazon shares to move higher; not only will this take out a round number that the traders are watching, but it will also move the 50-day moving average closer to transitioning into an intermediate-term bullish pattern.
The last time that AMZN saw a bullish transition like this was in April 2016 just before the stock set course on a 40% rally. Given this, our outlook on Amazon shares is beginning to lean towards being intermediate-term bullish after months of consolidation and lower prices.
Kraft Heinz Co (KHC)
Shares of Kraft Heinz are trading higher following an upgrade from Citigroup on Wednesday. KHC stock has been trading in a wide consolidation that is now resulting in a possible technical upgrade as the 50-day moving average is transitioning into an ascending pattern.
Kraft Heinz shares recently benefited from support in the form of their 200-day moving average, a trendline that resides at the $85.50-mark and is rising. KHC stock did post a “Death Cross” pattern last week that is quickly reversing within the next two weeks to a “Golden Cross”, which would add some bullish momentum for the technical traders to start hopping on-board.
Kraft Heinz stock will face a technical hurdle as it crosses $88 and begins to register some overbought readings from its RSI. That said, the short-term pullbacks in the KHC price should be viewed as buying opportunities, as it appears that the technical traders are now acquiring the stock for an intermediate-term hold.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
