Uncertainty over the next few days, including the Federal Open Market Committee meeting outcome, has traders pulling back on their positions. The additional selling is broad in its scope, which can be seen as positive because it suggests that the market is only slightly concerned about this week’s trading and it is not settling into a bear market correction.
American Airlines Group Inc (AAL)
American Airlines has spent the last two weeks leading the transportation sector lower, but it appears that the shares may be ready to run into some support that could act as a landing field for the stock.
AAL shares have declined more than 14% over the last two trading weeks as the stock has attracted bearish traders and profit-takers by breaking below their 50- and 100-day moving averages within days of each other.
The short-term decline dropped American Airlines shares to the point where the longer-running 200-day moving average is ready to come into play as potential support.
The long-term trendline sits at $40, which will also add some potential support to AAL stock given its round-numbered quality.
Additionally, American Airlines shares have now encroached oversold territory according to their RSI reading. This suggests that AAL stock should see some buying interest based on sellers’ having likely run out of momentum.
For now, the upside potential for American Airlines appears to be $45 as this is the lower channel of the price trend that runs from the stock’s bottom in June through yesterday’s close.
Seagate Technology PLC (STX)
Seagate shares are among the few shares that rallied hard after their earnings release as the stock rallied 33% higher after the earnings call. Now, STX shares are retreating a bit from the overbought situation that was created by this powerful rally.
We saw Seagate shares touch up on $50 two weeks ago, which was a psychological trigger for traders to start locking in some of their profits as STX stock had remained in overbought territory for an extended period.
Today, Seagate shares are breaking lower again on average volume as the stock moves closer to a 10% correction. For the most part, STX traders would view a 10% correction in Seagate Technology as a healthy move that would likely draw buyers back into the fold.
Conveniently, a 10% correction will place STX stock right on its 50-day moving average, which continues to trend higher today. Traders eyeing that potential buy level should watch just under the $44-level.
SBA Communications Corporation (SBAC)
SBA Communications stock has been enjoying a strong rally after its recent earnings report. SBAC stock’s move has taken it into technical overbought territory at the same time that the chart is running into an old resistance enemy.
Shares of SBA Communications officially became overbought on the move to $166 more than a week ago. The consolidation and slight move higher to $118 has maintained the overbought reading, warning of a short-term decline for SBAC stock.
Looking back at the daily chart, SBA Communications experienced chart resistance at $118 twice in August, meaning traders will be tepid about any softness in the daily pricing of SBAC stock at this level.
From a longer-term perspective, SBA Communications shares are transitioning into a bullish trend, as the 50-day moving average just crossed above the 200-day trendline for the shares. This suggests that SBAC stock is likely to trend higher over the next four to six months.
That said, expect to see some short-term profit-taking that may test the $112-level for SBA Communications shares as the stock works out of its overbought readings and offers traders a chance to “buy the dip” after the earnings report.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.