The market’s mixed trading results are filtering down to our daily chart reviews, which are now seeing more diversity in the technical patterns of companies. This suggests that the consolidation or slight decline in the market continues to wither away at the correlation that had supported the strong post-election rally.
Today, shares of General Mills, Inc. (NYSE:GIS), Tesla Inc (NASDAQ:TSLA) and Bank of America Corp (NYSE:BAC) represent the growing diversity of technical reads in the market that are creating opportunities for both the bulls and the bears.
General Mills, Inc. (GIS)
General Mills’ earnings results hit the Street this morning with some disappointment. The consumer food company delivered bottom-line results that were better than expectations while missing on their top-line revenue.
GIS shares are trading slightly lower, but the technical crowd should have been taking some warnings on the shares ahead of the earnings call.
First, General Mills’ just saw its 50-day cross below the 100-day. There’s no fancy term like “death cross” for this pattern, just that it signals a continuation in the weakening of the intermediate-term pattern for the price trend.
Second, the 50-day moving average has been forcing a lot of pressure on GIS shares. Since breaking below this trendline in February, it has acted as resistance for the shares.
We saw a spike in volume ahead of the earnings call, which tells us that there were some technicians that were concerned with the upcoming announcement, but the momentum trade for General Mills is certainly weakened further by the news.
Expect to see some stability in the shares as they reach an oversold indication soon, but the trend indicators are suggesting that this consumer staples company is set to continue under performing the market.
Tesla Inc (TSLA)
As we had predicted before the earnings results, Tesla shares fell to a “sell the news” reaction to the earnings results. TSLA shares have seen some strength since the initial decline; however, a more interesting technical situation.
The recent rally, which is now rolling over, is forming what could turn out to be a head-and-shoulders pattern. This pattern would have the “neckline” for Tesla shares at $260, a price that has been supporting as well as acted as resistance.
A break below $260 on any increase in volume will complete the bearish pattern targeting a price of $220 to $240 for TSLA.
Bank of America Corp (BAC)
Bank of America has ridden the strength in the financials after the election, but recently fell into a laggard role as interest rate uncertainty has affected the financial stocks.
BAC shares have rolled over from $26 and are trying to work off an overbought reading from their RSI, but the charts are indicating that a bullish trend even may be on the horizon.
Bank of America shares are closing in on their 50-day moving average, which currently sits at $23.92. The proximity to the round-numbered $24 will help put more impact behind the support that BAC should get from its 50-day.
In addition, a break to this price will generate an oversold signal from the stock’s RSI, making for three potentially bullish support points for Bank of America shares at $24.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
