Futures indicate some lower trading this morning as the S&P 500 and other major indices appear to be losing some steam. The term “stock pickers market” is fit for this market as the technical picture is dividing those that are ready to revert to their means from those continuing their moves higher.
Stryker Corporation (NYSE:SYK), ConAgra Foods Inc (NYSE:CAG) and Cerner Corporation (NASDAQ:CERN) are among those that are telecasting their next move to traders via their technical patterns.
Stryker Corporation (NYSE:SYK)
Stryker Corporation has rallied strongly with the health care sector lately as the equipment and supplies company has led the S&P 500 in relative strength measures. The company tripped over itself a bit after their earnings report resulted in a 5% pullback in shares.
The post-earnings selling took Stryker shares to a test of their 50-day moving average, which has been trending higher since early March. After “passing” the technical support test at their 50-day, Stryker shares are targeting higher prices again as health care stocks continue to see a migration of cash from other areas of the market.
Shares of Stryker also registered an oversold buy signal last Thursday as the stock was beginning its short-term bottoming process. We should see the momentum indicators like the MACD follow suit in confirming that the trend is going to remain in place on Stryker shares this week, confirming that the upside favors the stock at this time.
ConAgra Foods Inc (NYSE:CAG)
Yet another stock that has seen some short-term profit-taking is ConAgra Foods Inc. The company announced earnings on June 30, before rallying more than 1% while the S&P 500 remained locked in its current tight trading range.
More recently, Conagra shares have given that move up as they just bounced from their pre-earnings price of $46.
The pullback to $46 resulted in another short-term oversold stock being added to our list, a bullish signal for the traders out there. The technical charts suggest that Conagra shares have about 6% upside before running back into overhead resistance, which is enough for a trader to grab gains in a tightly traded market like this.
According to the longer-term charts, should Conagra shares fail to maintain their current support, the stock is likely to target a lower price of $44 per share, which would be a secondary entry to either add to existing positions or initiate new allocations.
Cerner Corporation (NASDAQ:CERN)
Another health care company on the technical radar is Cerner Corporation, though there are two pictures of the stock from the charts right now. First the short-term.
Cerner shares are currently presenting themselves as ready for a correction as the stock is rounding out a top just above $62 while maintaining a short-term overbought signal. This, after the shares were able to break through resistance at $60 in July.
Cerner is set to announce their earnings results today after the market closes. The last year-plus of earnings results have been “sell the news” events for the stock, leading to a warning sign for the short-term traders. Given the current technical picture, a reversion to the $58 mark is possible and likely. But there’s good news for traders.
Cerner shares just completed a golden cross technical formation last week. This pattern indicates that the intermediate-term pattern for the shares has been growing stronger and opens the upside for additional moves higher. The cross occurred just below the $58 level, which is where we see intermediate-term support for the stock and a likely buying opportunity.
In short, Cerner’s chart suggests that it’s time to lock in profits ahead of earnings but that a buying opportunity exists on a pullback.
As of this writing, the Johnson Research Group did not hold a position in any of the aforementioned securities.
