Thursday’s price activity is providing the bulls with some breakout opportunities to jump all over as the early July trade continues to favor the upside.
All three of today’s big charts saw increased volume on notable moves than suggest some bandwagon technical buying is likely to start pushing these stocks higher. Among them are Nvidia Corporation (NASDAQ:NVDA), Home Depot Inc (NYSE:HD) and Scotts Miracle-Gro Co (NYSE:SMG).
Nvidia Corporation (NVDA)
Semiconductor company Nvidia continues to lead the pack of technology stocks higher as shares are now moving towards breaking the $50 level. On a monthly basis, the shares have seen a parabolic move as the NVDA stock price has shot from $35 to nearly $50 since May, but the move shouldn’t scare the technical traders.
On a relative strength basis, Nvidia has been setting itself way ahead of the pack, which is why it continues to gain traction in what is now clearly a “stock pickers market”. The shares blasted through the $40 level in May, which was the old all-time high for the stock, and have not looked back as volume is now increasing, telling us that the stock is “in play.”
Helping the technical surge is the continued unwinding of short positions as the higher prices have squeezed short sellers back into the market as buyers.
The company is set to announce earnings in a few weeks, an event that has been a bullish catalyst for Nvidia stock for the last four quarters. Expect to see some consolidation before the announcement that could offer a buying opportunity.
Home Depot Inc (HD)
The retail sector has been a troubled group for the market as correlation among the stocks that make up the sector has been on the decline. This means that it is more important to pick the right stocks in the sector, like Home Depot.
Home Depot shares just finished a successful test of their 200-day moving average a few weeks ago as the stock consolidated around the $127 mark. The consolidation happened on increasing volume, telling us that technical traders were buying into the support.
Now, HD shares are in the process of breaking back above the key 50-day trendline, a catalyst that will get even more traders involved as a new intermediate-term bullish trend emerges.
Watch for this move above the $132 level to start gaining momentum as Home Depot becomes one of a small number of retailers that will be trading in a technical bull trend, making it a Best in Breed stock among the retail group.
Scotts Miracle-Gro Co (SMG)
The technical OMG stock of the day has to be Scotts Miracle-Gro. The shares surged more than 3% yesterday on what has been heavy trading volume for the last three days, the heavier volume comes as the stock was testing technical support from three trendlines — the 20-, 50- and 200-day moving averages.
This trinity of technical support has buoyed Scotts Miracle-Gro back into a bullish trend, as it has broken the downward trend that has been market by lower lows and lower highs since shares peaked in March. This reversal will grab the attention of Wall Street traders looking to grab alpha positions in the volatile summer months.
The current chart analysis suggests that this shift in momentum will take the March highs out relatively quickly and start to build more momentum as the shares are far from what would be considered overbought.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.