The market is looking at what appears to be a rare round of heavy selling as several headlines are perking the ears of traders this morning. Any weakness in the broader market may cause investors and traders to take profits on stocks that have been making fast and aggressive moves higher.
Today’s three big stock charts zooms in on Advanced Micro Devices, Inc. (NASDAQ:AMD), Mastercard Inc (NYSE:MA) and O’Reilly Automotive Inc (NASDAQ:ORLY) as all three of these stocks have made significant moves into overbought territory. This, along with other technical factors, put them on top of many trader’s “profit taking” lists.
Advanced Micro Devices, Inc. (AMD)
Semiconductor shares have been putting together a rally of late as the earnings season has been kind to some of the names in the group. Advanced Micro Devices shares have put in a 27% run since bouncing from their 50-day moving average and hitting an oversold reading at the same time.
The double-barreled support jettisoned AMD stock higher, right into the clutches of a mirror image. Now, Advanced Micro Devices stock is facing resistance from two factors.
First, AMD’s 50-day moving average, which is trending lower, is just overhead at $12.95.
Second, the stock’s RSI readings are nearing overbought readings as yesterday’s close generated a reading of 63 for Advanced Micro Devices.
This, along with a profit-taking mood hitting stocks should be enough to push AMD prices towards initial support at $11.
Mastercard Inc (MA)
Mastercard and Visa have traced similar chart patterns of late after some promising earnings reports. However, MA is showing signs of tiring as the stock is now placing a double top at $119. At the same time, the stock is encroaching on overbought readings, which should add selling pressure.
Declining volume on Mastercard suggests that the buyers have crowded into the stock on the recent rally. With this volume beginning to ebb, the sellers are more likely to take control of the day-to-day movement.
From the initial look at the chart, support for MA should fall into place at $113, which is the site of the stock’s rising 50-day moving average and its lower Bollinger Band. Watch for opportunity buyers to step in at this point.
O’Reilly Automotive Inc (ORLY)
Auto-related stocks have seen a lot of mixed action after a tough earnings season from the group. Despite the adversity, O’Reilly Automotive shares have rallied more than 8% in May after bouncing from an oversold and chart support level at $240.
We saw ORLY shares hit resistance at $260 on Tuesday, which obviously sent sellers into the market as the stock reversed early gains. Now, a clear rollover of the shares appears to be in motion, despite the fact that O’Reilly stock never reached overbought readings.
There is resistance just overhead from the 50-day moving average, which has been declining like a flyball into the outfield, putting pressure on ORLY shares from overhead. This is going to be a clear driver as the stock has been held down by the same trendline in April.
Traders may take a little time to see if $252 will hold the wall of sellers at bay, as this was the April low. That said, a move below this mark will likely target new lows around $220.
As of this writing, Chris Johnson, Johnson Research Group did not hold a position in any of the aforementioned securities.