Stocks are sinking into the red on Friday despite a better-than-expected April retail sales report. The problem is the ongoing flow of disturbing earnings results from retailers such as JCPenney Company Inc (JCP), which is down nearly 4% after reporting a top-line miss and negative comp-store sales growth.
As a result, the Dow Jones Industrial Average has taken out major technical support: The 50-day moving average has been lost in a major way for the first time since late February. This sets up a possible retest of the 200-day moving average last touched in March.
The selling pressure is widening, putting a number of blue-chip stocks at risk.
Here are three to watch.
Dow Jones Titans Tanking: Boeing Co (BA)
Boeing (BA) is at risk of falling below its 200-day moving average after making the third breakout attempt since March earlier this week.
This comes in the context of a long downtrend going back to early 2015, as doubts about the health of the airline industry grow. Recent reports suggest that overcapacity is weighing on profitability, which in turn could limit new orders.
The company reported an earnings miss back in April on its tanker program, and will next report results on July 27. Analysts are looking for earnings of $2.14 per share on revenues of $23.2 billion.
Dow Jones Titans Tanking: Caterpillar Inc. (CAT)
Caterpillar (CAT) shares look set for break below its 200-day moving average as the heavy equipment manufacturer is dragged down by the boom-and-bust of commodity prices in China as regulators clamp down on runaway speculation.
The company will report results on July 26 before the bell. Analysts are looking for earnings of 98 cents per share on revenues of $10.6 billion.
Edge Pro subscribers just closed a trade in the May $74 CAT puts for a 23%-plus gain.
Dow Jones Titans Tanking: Bank of America Corp (BAC)
Bank of America (BAC) looks vulnerable to a collapse below its 50-day moving average, violating the post-February uptrend. The deployment of negative interest rates in Japan and Europe, a recent rally in U.S. Treasury bonds, a dropoff in initial public offering and mergers and acquisitions, and ongoing energy sector defaults should all continue to weigh on profit growth for the big banks.
The recent rise in bad loan offsets, a reversal of the post-recession trend of loan reserve releases, will directly weigh on earnings going forward.
The company will next report earnings on July 18. Analysts are looking for earnings of 37 cents per share on revenues of $20.94 billion. Edge Pro subscribers are holding a position in the June $14 BAC puts and are enjoying a gain of nearly 30% so far.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
