The Trump rally continues to punch certain sectors and stocks higher as we head into the last trading month of the year. Of course, most investors are asking “can we believe in this rally?” or “Can this rally last?” The answer is detailed in the charts of those stocks that have made some of the larger moves since the beginning of November.
Today’s three big stock charts look at Trump Rally victors with United States Steel Corporation (NYSE:X), Home Depot Inc (NYSE:HD) and Fiserv Inc (NASDAQ:FISV) asking and answering the question, “Can these rallies continue?”
United States Steel Corporation (X)
The steel industry has received a great bump from the election results as the market and the industry see President Trump as a plus for their business. Why not? We’re clearly going to see a massive increase in infrastructure and defense spending, both which will create demand for steel products.
Also, the focus on “Made in America” means that we are likely to see tariffs on products that other countries have been crushing with cheap alternatives and steel is high on that list.
U.S. Steel shares have rallied more than 80% since the beginning of November. While the run in X stock looks over, it may just be the beginning.
Oversold conditions on U.S. Steel shares suggest that the market is likely to see their price fall a bit, but you’re almost guaranteed that there are buyers waiting in the wings to scoop X shares up on any dip.
The current prices in U.S. Steel, above $32, take out some historical chart resistance at the $32-level, potentially opening-up more movement to the upside.
From a long-term perspective, X shares are trading well above their 20-month moving average, which is now moving higher itself. This matches the terms of a long-term bull market being drawn for U.S. Steel stock and suggests higher prices through 2017.
For now, X stock is likely to show some consolidation at the $32- to $33-level; however, we may see another round of buying come in without a significant decline in shares. U.S. Steel is one of those stocks where investors have to avoid getting greedy by waiting for a large pullback and remember that overpriced can always become more overpriced, leaving you behind.
Home Depot Inc (HD)
Retail results will be flowing into the market throughout the week as retailers tally up their Black Friday take. Initially, the numbers haven’t been as good as some analyst expected. The reason? More of us are combining our online shopping with brick-and-mortar shopping.
Home Depot shares just crossed over their 50-, 100- and 200-day moving averages within the last week of trading. The move in HD stock improves its technical outlook.
At the same time, Home Depot shares have peaked into overbought territory according to their RSI reading. This causes some concern, but it is somewhat offset by the growing momentum readings on HD shares. In other words, the strength of the trend looks to override concerns that Home Depot shares are overbought for now.
Movement has been on heavy volume, telling us that there is a migration of cash into HD stock. This suggests that the stock will find buyers on dips as investors continue to chase the performance of Home Depot shares into the New Year.
Fiserv Inc (FISV)
Fiserv shares have struggled over the company’s last two earnings reports, lagging the market in performance for the first time in more than a few years. Now, FISV stock is starting to make a strong move higher after months of consolidation.
We watched Fiserv shares consolidate at the $100-level, which has chart implications just because of its round-numbered quality. After dipping below this critical mark just ahead of earnings season, FISV stock finally got some strength as the company beat earnings and confirmed its outlook.
Fiserv’s key trendlines have all transitioned into bullish catalysts over the last two weeks with the key 200-day trendline moving into a support position at $103. This will help the technical traders continue to move cash into FISV shares.
We may see some resistance at $110, but the way Fiserv’s momentum is building, it should be just a short endeavor that leads to higher prices.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
