Headline news is causing traders to check the charts of Mylan N.V. (NASDAQ:MYL) and Campbell Soup Company (NYSE:CPB) as the bears look to potentially take these stocks lower. At the same time, traders are maintaining the consistent, low volatility bullish trend in Microsoft Corporation (NASDAQ:MSFT), as the stock continues to consolidate just below $66 in preparation for what may be the next step higher in the software giant’s strong recovery.
Mylan N.V. (MYL)
News that Mylan would be recalling 81,000 Epipens on report of their failure caused shares prices to slump in the pre-market trading. After the open though, MYL shares are higher as the stock prepares to test technical support.
Mylan shares have been declining almost each day in March as uncertainty over health care changes and their effect on drug price coverage has caused investors to take profits after the stock rallied for the first two months of the year.
The decline resulted in MYL shares approaching their 200-day moving average, currently at $41.02, just $0.10 lower than today’s lows.
Mylan stock will likely gain mild support from the longer-term moving average, which is transitioning into a slight uptrend. That aside, more serious and stronger support is slightly lower on the price scale.
MYL’s 50-day trendline currently sits at $40.50 and from our estimates it is likely to be the trendline that helps Mylan reverse its recent selling. The trendline is in a bullish pattern, suggesting more strength for support. In addition, MYL shares will have hit an oversold reading at this point, adding to the potential for a tradable move higher. Bulls should be setting their targets for $40.50 on Mylan.
Microsoft Corporation (MSFT)
Microsoft shares continue their low volatility march higher to take even more of a relative strength leadership role in the market.
MSFT has been on the rise since its last earnings report, which surprised bearishly postured investors. We’ve continued to see signs that the market is moving into Microsoft shares on the slightest declines, building the continued rally.
MSFT stock has spent the last month consolidating around $65, making a short run at $66. The consolidation has allowed for Microsoft shares to begin to use their 50-day moving average, which is in a bullish trend, to ratchet higher.
There are indications that the lackluster movement in Microsoft stock may shift into a volatility rally as the stock breaks above $66, which would potentially move MSFT shares above the top Bollinger Band.
For now, we expect the stock to continue to lie and wait for the next broad market rally that is likely to trigger a rally to the $70-level for Microsoft shares.
Campbell Soup Company (CPB)
Campbell Soup announced a $1.5 billion stock buyback program this morning, something that reminds us of the quirky little tricks that often get used by companies when trying to stretch earnings news.
CPB stock sold-off after its last earnings report and broke through all three critical support trendlines since. Now shares of Campbell Soup are threatening two critical moves.
First, a break back below $57, which would take CPB stock below an obvious chart support level that tracks back to 2016.
Second, the stock’s 50-day moving average has completed a transition into a bearish trend, increasing the odds that Campbell Soup’s stock will see a decline each day by more than 50%. In other words, the trend is no longer a friend of CPB stock owners.
Watch for a move to $53 on the break back below $57 over the intermediate-term outlook.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
