Technology shares are starting to see more selling pressure as this segment of the market has been more ripe with profits for traders to pick from lately. Today’s Three Big Stock Charts takes a look at shares of Facebook Inc (NASDAQ:FB), Nvidia Corporation (NASDAQ:NVDA) and Cree, Inc. (NASDAQ:CREE) as all three companies are experiencing selling pressure as the market steers towards earnings season.
Facebook Inc (FB)
Facebook shares have begun the week on a weaker note as they emerge from the month of March in overbought territory. FBt has been boosted by poor performance by its peers like Twitter Inc (NYSE:TWTR) and their relatively quick reaction to containing claims of fake news feeds and other pesky issues.
Despite this, Facebook shares are weakening because of the risk and we could see them make a bumpy re-entry to normal price territory as the shares test $140. This round-numbered line in the sand has no real technical value as FB stock is trading just below new highs. That said, a move below this mark will get the traders in profit-taking mode on a break below the round-numbered level.
Facebook shares remain a technical buy, just overbought now, so a plan to “buy the dip” is the most sensible plan from here as most technical traders aren’t willing to buy the shares at their top.
As it stands, FB shares are likely to break $140, but find potential support at $136 almost immediately from their rising 50-day moving average. This trendline has been supportive of the shares only once this year, when Facebook stock was switching into rally mode in January.
Technically, the worst-case scenario, and where we’ll see the most technical buying, is if FB were to gain momentum to $128, which is where the 100- and 200-day trendlines are residing near each other.
This is the likely location where we would see the big technical money come in on the shares as they would also be entering technically oversold territory at that point.
For now, Facebook chart watchers should eye the $140 price as a potential trigger or stop to avoid what is likely to become a deeper profit-taking experience.
Nvidia Corporation (NVDA)
Shares of the semiconductor juggernaut are trading more than 6% lower after a downgrade to the stock by a smaller firm. The downgrade is the fourth in as many weeks as the analyst community is now taking their profits from the table on NVDA stock, which has been trading more than 200% higher over the last 12 months.
The charts for Nvidia have been over the last six months as shares are now trading below their 50-day moving average, which is transitioning into a declining pattern.
The 100-day is in-play on NVDA shares today as support, but this accounts for the second time that we’ve see the stock lean on this trendline for support in less than a month.
Our models suggest that Nvidia stock is due for some more profit-taking as the 100-day is likely to give way and open the path to the next support level of $90, which would likely provide a buying opportunity for the technicians.
Cree, Inc. (CREE)
Shares of CREE are down more than 7.5% on average volume and no news as the stock is now slicing through its longer-term 200-day moving average. The move takes CREE stock into an oversold reading immediately, though the trend on the stock indicates that a bounce from this oversold reading is likely to be sold into.
This forecast is due to the bearish trend in the 50-day moving average which turned bearish in early March. This trendline has provided staunch resistance for CREE shares through the month and it now serves as a warning of lower prices to come over the intermediate-term outlook (3 to 6 months).
According to the current technical models, CREE shares are likely to find some support at the $22-level, about 10% lower than current prices.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.