We’re starting to see more technical snags in the bull market that initiated after the results of the election in November. All sectors are beginning to see dealers take profits or worse, knock stocks out of their intermediate-term bullish trends.
Today’s three big stock charts looks at examples of the latter with a quick analysis of the shifting trends in Autodesk, Inc. (NASDAQ:ADSK), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and CA, Inc. (NASDAQ:CA).
Autodesk, Inc. (ADSK)
Autodesk shares have fallen by about 8% after the company announced earnings and guidance that disappointed Wall Street analysts. ADSK stock’s drop may be exactly what short-term traders should be looking for from this market leader though.
Over the last year, Autodesk shares have appreciated by more than 40%, after the 8% decline, putting it among the top third of performers within the S&P 500. ADSK stock’s technicals have been strong in giving support to the shares on pullbacks.
This brings us to the current technical test. Autodesk’s decline has the stock tagging-up with its ascending 50-day moving average. This trendline has been extremely supportive of ADSK shares since turning bullish in July 2016.
The last test of the 50-day resulted in a rally from $75 to $90 since the beginning of the year.
Alexion Pharmaceuticals, Inc. (ALXN)
Alexion dropped 1.4% on Wednesday on an increase in volume as the shares tumbled through two key technical trendlines and found support at a third.
First, let’s discuss the broken technicals. ALXN shares slid below their 50- and 200-day trendlines. The former has been in a short-term ascending pattern that signaled a potential transition into bull rally mode for Alexion stock. This transition actually formed what is referred to as a Golden Cross when the 50-day moved above the 200-day last week.
The celebration for traders has been short lived though as Wednesday’s trading saw heavy volume break lower.
Ultimately, ALXN shares were able to muster up some support from the 100-day trendline that currently resides at $126.41.
Herein lies the test for Alexion stock. A break below the 100-day over the next few trading sessions will increase selling pressure and target a technical move to $120 over the short-term. Unfortunately, the upside for ALXN is limited, as a pattern of lower highs and lower lows indicates $135 as the likely top for the shares over the short-term.
CA, Inc. (CA)
Through the first half of 2016, shares of CA had been relative strength leaders as they shot almost 25% higher during that period. Unfortunately, the trade became crowded with bulls and it has lagged the market since.
Year-to-date, CA shares are only up 0.8% against the Nasdaq Composite returns of about 8%. It appears from the charts though that the stock is likely to remain a laggard.
Since its top in August 2016, CA shares have put in a consistent pattern of lower highs and lows. The bearish trading pattern has CA shares teetering towards slipping into a technical bear market.
Support in January came from the stock’s long-term, 20-month moving average, the line of demarcation between bull and bear markets.
Wednesday’s decline broke CA shares back below their 50-day moving average and immediately tested the 100-day, which held for the day.
With an RSI reading that indicates that CA shares are far from being oversold, the sellers are likely to increase pressure on the stock as it is squeezed between a worsening technical rock and hard place.
Expect a break below the 100-day ($31.98) to accelerate the stock’s bearish move to its long-term support at $30.71. From there, a break lower takes CA into a bear market.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
