Earnings season hits the financial sector today and investors don’t seem awfully impressed as banking stocks are trading about a half percent lower while the remainder of the market trades flat. Traders and chart watchers should expect some lighter trading in the afternoon today as many will get an early start on the holiday weekend.
Today’s three big stock charts takes a look at two stocks in bearish transitions, JPMorgan Chase & Co. (NYSE:JPM) and Whiting Petroleum Corp (NYSE:WLL) as well as one big company that is showing potential for a short-term bull run, Apple Inc. (NASDAQ:AAPL).
JPMorgan Chase & Co. (JPM)
Despite some positive earnings, JP Morgan stock is only treading water this morning as the stock is basically flat. We’ve been covering some of the financials ahead of earnings as the technical tide has been turning on these stocks.
For JPM, the concern will be a move below $85. Per the chart, this represents two key technical items.
First, the stock’s lower Bollinger Band is trading just below this level. A break of this band on a closing basis will cause a volatility sell-off for JP Morgan that would likely target $82 with haste.
Second, $85 marks the March lows when technical traders defended JPM stock after its last break of the bottom Bollinger Band. The market doesn’t like to see round-numbered levels that had previously been defended broken, it turns them into sellers fast.
JP Morgan shares do have the fact that the current RSI reading is starting to indicate that the shares are oversold. Picking up on this, we point out that these oversold signals are more bullish when JPM stock has seen a sharp decline, not a slow and steady one like it has had lately.
Apple Inc. (AAPL)
Apple made the headlines this morning with a note circulating that the stock could potentially target Walt Disney Co (NYSE:DIS) as an acquisition to increase their content business. The idea is clearly more of a novelty to traders, who haven’t bid the price higher or lower on the news.
After topping out around $145, AAPL stock has been slowly declining with the market as investors appear to be taking a wait-and-see approach to how earnings season may take hold of stocks.
The chart of Apple stock is relatively unexciting, except if things lead to a price that is just slightly lower than $140.
According to the charts, $140 has been a significant level for the bulls when it comes to “buying the dip” as each touch of that price has seen an increase in buying volume since early March.
Additionally, AAPL stock’s 50-day moving average is creeping higher and will soon intersect with the $140 price point, building what we refer to as “double barreled” support.
The bottom line is that we usually see Apple shares rise ahead of their earnings announcement. The company is slated to release their next earnings on May 4. Putting that together with the support we see building at $140, it appears that AAPL stock is ripe for a “buy the rumor” surge over the next few weeks.
Whiting Petroleum Corp (WLL)
Oil and gas stocks will start to hit the tape with their earnings results over the next few weeks. In general, higher oil prices have helped this sector, but there are still some laggards in the group. Whiting Petroleum is one of them.
WLL shares snapped through their 200-day moving average during trading yesterday and are tacking another losing day so far this morning. The 200-day is only part of the problem. Selling volume for Whiting has been on the rise along with volatility recently as traders are clearly losing faith in the stock after it broke back below the $10-level. For the most part, traders start to shy away from single-digit stocks like WLL.
One more pressure point for shares of Whiting is the declining 50-day moving average, which itself is now trading below $10 too. History shows that a declining 50-day paints a bearish intermediate-term picture for a stock over the next two to three months.
Based on our analysis of the chart, traders should expect to see an $8 print on shares of WLL before the bulls give it a go again.
As of this writing, Johnson Research Group did not hold a positition in any of the aforementioned securities.