Investors are watching stocks make another move lower as the new administration failed to get its healthcare bill to a vote in the House last week. This development now has many wondering about the potential that other initiatives that would have been stimulative for the economy may not move through Congress very easily.
Financials are leading the market lower today, along with the materials and construction companies, a clear sign that sellers are targeting the groups that would benefit from the expected Trump administration agenda.
Today’s three big stock charts looks at one of the financials in the seller’s crosshairs with Goldman Sachs Group Inc (NYSE:GS) and we’re looking at potential earnings-related moves on the charts for Micron Technology, Inc. (NASDAQ:MU) and Darden Restaurants, Inc. (NYSE:DRI).
Goldman Sachs Group Inc (GS)
Goldman Sachs shares are tangled-up in the knee jerk reaction to last week’s political developments, as traders question the likelihood of any regulatory reform. Shares are trading more than 2% lower in early morning activity.
More problematic is that the stock has broken through a series of significant trendlines. Last week, Goldman shares moved through the 50-day moving average, which is now transitioning into a neutral to bearish pattern.
Today, the shares are completing a move below the 100-day moving average on an increase in volume, which is signaling that the market’s moving away from the sector to higher ground. Making matters worse, the stock is now trading outside of the lower Bollinger Band, indicating that the volatility swing is likely to remain fast and to the downside.
For now, the stock remains at-risk for another potential 10% decline to the $200 level where round-number and the shares’ 200-day moving average are ready to lend support.
Micron Technology, Inc. (MU)
Micron shares surged higher on Friday after a positive earnings result that impressed investors. The stock has reversed those gains as the political headlines took center stage and caused panic profit-taking on Micron’s good news.
Today, MU stock is stabilizing at its lows from Friday, offering traders the potential to pick-up the stock closer to their pre-earnings prices. From a chart perspective, $28 should be viewed as the testing ground for the bulls as this is potential round-numbered support and just below the opening “gap” from Friday.
$28 also represents the top Bollinger Band level for the shares. Should the shares remain above this band. We expect to see the upside volatility continue as long as Micron shares continue to trade above these levels.
Darden Restaurants, Inc. (DRI)
Darden will release its quarterly earnings results on Tuesday, after the close. Darden shares have seen an improvement in performance of late as the shares moved back above their 50-day moving average, which is also trending higher.
In addition, the stock’s 100-day moving average is moving higher, just below the 50-day. The combination of these two trendlines beneath current prices indicates some strong support for shares on any unexpected earnings results. This takes some of the downside risk out of trading Darden ahead of earnings, which is what traders look for.
Darden shares currently have a short interest ratio of 9.1. This suggests that there is significant potential for the stock to experience a short covering rally on any positive earnings news. Traders will be eyeing $78 as the trigger for this potential rally as this is where the stock has found resistance in the past quarter as the short positions were building.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
