There are days like today, when you feel like there’s no way the market will go back down. Things are settling from a geopolitical perspective, earnings have been great, stocks are bouncing from technical support levels and then … bang, things turn again.
Today’s three big stock charts look at three stocks that are giving traders that warm and fuzzy feeling this morning as the stocks rally from last week’s carnage. But beware, not everything is a buy right now, as we’ll see when we look at the charts for Nvidia Corporation (NASDAQ:NVDA), Micron Technology, Inc. (NASDAQ:MU) and Western Digital Corp (NASDAQ:WDC).
Nvidia Corporation (NVDA)
We talk about Nvidia stock a lot, and why not, everyone else is talking or trading it. This means you need to follow the stock closely for every opportunity it gives. Last week, NVDA blasted the earnings report out of the water. Expectations were high, which is why we didn’t see it take off after the report, but the chart is helping now:
- Again, Nvidia was able to impress the market with fundamentals that are making all other companies jealous. That said, last week’s report fell on hard times as the market was correcting and expectations for the results were already baked-in to the price. This was a “sell the news” situation waiting to happen.
- Friday, NVDA stock bounced from its 50-day trendline. This trendline has offered support for a long time and continues to be Nvidia’s “friend”. The fact that the 50-day maintains an upward trend is also bullish for the stock.
- Traders now see NVDA stock as a technical value after the bounce, especially since the stock is far from being overbought. Watch for the ceiling to move higher on this stock as it moves to new highs.
Micron Technology, Inc. (MU)
Everyone is flocking to technology, but it’s time to make sure that you’re careful not to buy just any short-term bounce thinking that it’s a “deal”. Micron, like many stocks, is having a good day today, but it is likely to be short-lived.
Here’s why you need to be cautious about buying this on on today’s rally.
- Traders aggressively sold MU shares after the company’s last earnings report as the expectations for its forward-looking report were high.
- Micron stock is trading well below its 50-day moving average. This trendline has also transitioned into a bearish pattern, which suggests that sellers will remain in charge over the intermediate-term outlook.
- MU shares are rebounding from a technically oversold reading of their RSI, which happened last week. This is helping today’s rally, but chart resistance is in place overhead at $84. The stock will likely reverse at this point, giving the bears something to short.
Western Digital Corp (WDC)
Western Digital had been a relative strength leader in the market, but it has recently rolled-over and is looking a little bearish on the intermediate-term outlook. The WDC chart is seeing some play today, but there’s more downside than upside on this technical laggard.
Here’s why:
- After the Western Digital’s last report, shares plunged through their 50-day moving average, a trendline that had been supportive of the stock. Since then, the 50-day has transitioned into a bearish outlook pattern.
- The WDC chart now shows patterns of lower highs and lower lows, indicating that traders are selling shares of Western Digital on each short-term rally.
- WDC shares’ 200-day moving average currently sits at $78, which will be a critical test for the stock. A break below this mark will forecast a 10% decline in shares.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
