3 Big Stock Charts for Wednesday: Amazon.com, Inc. (AMZN), United States Steel Corporation (X) and Anheuser Busch Inbev SA NV (ADR) (BUD)

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The last day of the year is not likely to make any moves that traders should read implications from; however, the trends and movements in Amazon.com, Inc. (NASDAQ:AMZN) continue to indicate that the stock is ready to continue following what has become a seasonal pullback that investors should take note of.

On the bullish side, shares of United States Steel Corporation (NYSE:X) are forming a very nice consolidation above technical support levels that are likely to draw another buying opportunity before this infrastructure company heads higher again. Additionally, beverage giant Anheuser Busch Inbev SA NV (ADR) (NYSE:BUD) are wrapping-up what could be a long-term foundation build as the shares are now beginning to emerge from the depths of their recent lows. With momentum building and a slight volatility increase, the time may be right to crack open a BUD.

Amazon.com, Inc. (AMZN)

Amazon.com, Inc. (AMZN)
Source: Chart courtesy of StockCharts.com

Amazon shares have been lagging the market for more than a month as the online retailing giant has been struggling against what feels like an annual rite of passage. Last month, AMZN shares hit an overbought reading on their long-term monthly RSI, as the shares hit their all-time highs of $850.

The oversold readings are like those that we saw in 2013, 2015 and now in 2016. These readings suggest that Amazon stock has run too far too fast as traders have stretched the stock to a technical breaking point.

The last two times AMZN has seen these readings resulted in a 30% decline in the stock over a three-month period. Currently, Amazon stock is trading about 12% off its highs and indicating that it has the potential to move lower.

In addition to the technically overbought readings, AMZN stock is on another “danger list”. Namely, the list of potentially crowded trades on Wall Street. As of this writing, 90% of the Wall Street analysts tracking the stock had it ranked as a buy or strong buy. This indicates that the Street is heavily crowded in Amazon shares, increasing the potential selling pressure on the stock.

For now, the 20-month moving average is our buy target for AMZN. This trendline has provided significant support for the stock in the past and acts as the line between bull and bear market.  A pullback to this mark would equate to a 25% pullback and a healthy correction.

United States Steel Corporation (X)

United States Steel Corporation (X)
Source: Chart courtesy of StockCharts.com

Steel stocks took the lion’s share of rally potential after the elections as the outlook for infrastructure and rebuilding stocks brought them to the front of the line for investors. U.S. Steel rallied more than 80% in the months following the election, blowing the rest of the market away.

Traders backed-off their buying of these stocks as they reached extremely overbought levels, but this situation is changing as we continue to watch a powerful consolidation above the $32-price point.

The current rally compares easily to previous volatile moves above long-term support. Most notable is the comparison against the late-2013 rally that saw shares of X move 135% higher before ultimately pulling back to earth.

One difference here is that the 2013 rally was quickly reversed and it did not see a healthy consolidation as we are seeing now. This difference may mark a more positive outlook for the U.S. Steel and other steel stocks in 2017.

For the record, X shares transitioned into a bullish pattern way back in March and April of 2016, meaning that the more recent rally is just a string in a succession of long-term rallies. Shares of U.S. Steel are up more than 300% since they triggered their bullish technical signal earlier this year.

For now, traders would look for a chance to buy into shares of X on a move to the $32-level and hold from there as the long-term outlook remains positive.

Anheuser Busch Inbev SA NV (ADR) (BUD)

Anheuser Busch Inbev SA NV (ADR) (BUD)
Source: Chart courtesy of StockCharts.com

Some traders are taking notice of the short-term trading opportunity on Anheuser Busch. The interest in BUD came after earnings hammered shares all the way down to $100. Over the last two months, Anheuser Busch shares fell more than 25%, while the rest of the market saw strength. Now, volume is coming into BUD stock as it makes a bullish move.

This morning’s rally has the stock trading above its top Bollinger Band after a thwarted attempt at the same technical move a few weeks ago. The break above this indicator tells us that we are likely to see more upside volatility over the next week or so.

BUD will face a short-term challenge as it approaches the $107-price, as this is the site of the stock’s 50-day moving average. That said, it is normal for a stock that has seen a precipitous drop like Anheuser Busch over the last month to be able to slice through these trendlines given the bullish volatility.

Intermediate-term traders will start moving back into BUD shares next week as volume returns to more normal levels. The return of volume should start a move that will target $119 for Anheuser Busch over the next month.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/01/3-big-stock-charts-for-wednesday-amazon-com-inc-amzn-united-states-steel-corporation-x-and-anheuser-busch-inbev-sa-nv-adr-bud/.

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