The rotation in the market continues as technology stocks continue to experience profit-taking pressure. The flow of selling from the technology stocks is favoring the industrials, basic materials and other “Trump” sectors. For the time being, the technology sector should see more selling pressure as the Nasdaq 100 and many of its components have broken through key support levels.
Today’s three big stock charts look at shares of Nvidia Corporation (NASDAQ:NVDA), which are now seeing profit-taking after another stellar earnings season, along with Microsoft Corporation (NASDAQ:MSFT) shares, which continue to slump after its earnings report. Finally, Consol Energy Inc. (NYSE:CNX) takes the third spot as a bullish materials stock on our radar.
Nvidia Corporation (NVDA)
Last week, we covered Nvidia as a bullish stock ahead of its earnings report. As suspected, the report knocked the cover off the ball and NVDA shares spiked more than 25%, but they are now sitting in a precarious position.
Shares of Nvidia surged above the top Bollinger Band on Friday in the wake of the company’s earnings report. Typically, the move would signal that NVDA stock is likely to move into a new parabolic trend, but Monday’s decline threatened to break the stock back within the range of its bands.
A break back below the top Bollinger Band will accelerate selling pressure for Nvidia. The recent rally has also triggered an overbought situation per NVDA’s RSI. This adds overhead pressure to Nvidia stock over the short-term.
Per the technicals, there’s a potential support level in place at the $71.03- and $75-levels that may draw buyers back into this relative strength leader as it presents itself as a value purchase. For now, the sellers are likely to retain control, but the bulls are waiting on NVDA stock as the long-term trend is likely to continue.
Microsoft Corporation (MSFT)
Another earnings performer that is seeing selling pressure is Microsoft. MSFT moves into the last quarter of the year as one of the stronger performers within the Nasdaq 100. The post-earnings rally took Microsoft shares to new all-time highs, triggering some “sell the news” traders into action.
Like NVDA, MSFT’s chart shows potential support, but there’s more downside potential before we get to that level.
Yesterday, Microsoft shares broke back through their 50-day moving average, a technical signal that will get some traders selling the shares on a shift in the intermediate-term outlook. The selling is likely to target a move lower to the next level of support for MSFT.
Looking lower, the $54.50-level is the next level of support that is likely to attract buyers to Microsoft shares. Coincidentally, this level will also trigger a buy signal from MSFT stock’s RSI, which is closing in on an oversold reading.
For now, the Microsoft bulls should keep watching for a $54.50-point before jumping back into the shares before they resume their bullish long-term course.
Consol Energy Inc. (CNX)
Energy and basic materials stocks are among those that are getting a bid after the Trump victory. As such, Consol Energy is one of the operators in the coal industry that is garnering the attention of the bulls.
CNX operates coal mines, among other things, located in the Pennsylvania area. Consol Energy is known for its ability to change its output production nimbly, meaning CNX should be able to maintain inventory if/when demand for coal continues to grow.
Support is presently just under Consol’s current prices in the form of the stock’s 50- and 200-day moving averages, both of which are trending higher. The ascending pattern of these trendlines suggests that the intermediate-term outlook is improving for CNX.
Given the slow and steady rally that we’ve seen in the Consol shares, they have avoided becoming overbought and uncrowded. This means that CNX shares should remain less volatile than the rest of the market while providing steady gains.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
