The post-Federal Reserve rally looks like it lost steam Thursday afternoon as volume picked up and prices dropped. The sudden softness appears to be more of a sign of an overextended rally than a shift in the trend.
At the equity level, we’ve seen more breakout activity over the last few days. Not really a surprise considering the S&P 500’s move. Today’s gig stock charts looks at Fitbit Inc (NYSE:FIT), J M Smucker Co (NYSE:SJM) as a bounce-back candidate and Six Flags Entertainment Corp (NYSE:SIX) as a seasonal play.
Fitbit Inc (FIT)
We wrote about Fitbit when it was trolling above $12, but had set into a bullish trend that was targeting a move to $15. Sitting at $16.76 right now, FIT stock has just given another technical trigger that will get the technicians buying.
For a week now, Fitbit shares have been trying to move above their 200-day moving average, one of the most-watched trendlines. This trendline, as suspected, provided some resistance for Fitbit shares, but yesterday’s trading activity broke above the resistance on heavier than average volume.
The break above the 200-day is a large technical win for Fitbit shares, as it will now draw the attention of more buyers ahead of their earnings announcement next month. One thing that we’ve noticed with Fitbit is that the stock tends to have a “buy the rumor” crowd ahead of its reports. Breaking through the 200-day trendline will increase this activity and continue Fitbit’s trek toward $18 to $20.
J M Smucker Co (SJM)
After a poor earnings report on Aug. 23, Smucker’s shares have shaved-off almost 13% of their value. The stock had cut through its shorter-term moving averages that could have provided support and went into freefall mode. This week, though, Smucker’s shares finally found some technical buyers as SJM stock touched down on its 200-day moving average for the first time since November 2015.
Not so coincidentally, Smucker’s stock also registered an oversold signal this week, as it was finding potential support at the 200-day moving average. This will add to the potential for the $135 level to act as an intermediate-term support level that will help SJM rebound.
Shares of Smucker’s are still trading well within the ranks of a long-term bull market trend, meaning that investors will still want to hold the stock for the long term and are more likely to see the pullback as a buying opportunity.
In this case, the technical support offered is likely to signal that now is the time to grab these shares before they commence their rally.
Six Flags Entertainment Corp (SIX)
With summer coming to an end, it’s interesting that Six Flags would pop up as a seasonal play, but that’s what it is. The entertainment company obviously makes the majority of its revenue through the warmer months of the year, so one would think that SIX stock sees buying interest in the spring. Not the case.
Since their inception, Six Flag stock has seen positive returns for the months of September through November 85% of the time. The average return for these months, 6.86%. That consistency of returns is much better than the market offers.
Six Flags also made our list today since the stock broke above its top Bollinger band yesterday on a relatively heavy-volume move. The break indicates that we’re likely to see a fast and aggressive move higher in the shares.
At the same time, Six Flags shares broke above their 50-day trendline, breaking a potential level of resistance.
Summing it up, SIX stock just had three bullish technical signals that should have the technicians flocking to the shares to kick off its traditionally seasonal strength in grand fashion.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
