The bounce from Wednesday’s selling spree continues suggesting that the market may have simply overreacted to the political headlines — shocker! As we mentioned yesterday, the dip in prices may prove to be nothing more than an opportunity to buy a dip.
Continuing on that theme, today’s three big stock charts look at shares of Alibaba Group Holding Ltd (NYSE:BABA), McKesson Corporation (NYSE:MCK) and Analog Devices, Inc. (NASDAQ:ADI), all of which are showing further potential for upside based on their charts.
Alibaba Group Holding Ltd (BABA)
Alibaba took a big dip after their earnings on Thursday, generating an opportunity for investors to grab this market-leader after it has reloaded for another climb higher.
BABA shares of the online retailer almost touched-down on their 50-day moving average on Thursday, close enough for the technical traders to jump on the bullish bandwagon, which really isn’t a bandwagon at all.
According to our data, Alibaba short sellers had been loading-up on bearish bets ahead of the announcement, indicating that a short covering rally was likely to move the stock higher. In BABA’s case, the dramatic selloff followed by support from the short-term selloff triggering the covering rally.
From here, shares of Alibaba are getting a lift from breaking above the $125-level as the shorts cover and the analyst tout the upside potential.
McKesson Corporation (MCK)
One of the industrial names that has been caught in the political turmoil is McKesson Corporation. MCK stock headed into its earnings announcement trading with some increased volatility and trading into resistance at the stock’s 50- and 100-day moving averages.
This morning’s post-earnings move takes McKesson stock above this resistance at the same time that it ascends above the longer-term 200-day moving average. This is an incredibly bullish move that will attract technical traders to the name.
From a fundamental perspective, MCK will benefit from infrastructure spending, regardless of what happens with the current administration. This is the fundamental driver behind the stock’s move.
McKesson stock’s 50- and 100-day moving averages were in the process of shifting into a bullish outlook as both are beginning to trend higher. Today’s move will conform and strengthen that outlook. The technical target based from the chart is $170 over the short-term.
Analog Devices, Inc. (ADI)
Some of the larger semiconductor stocks have had a rough go lately, but the smaller companies are gaining strength. Analog Devices is among the latter as the stock is trading 12% higher year-to-date and 46% higher over the last 12 months.
ADI stock is spending the day making a move above its 50-day moving average, which is a bullish development.
In addition, Analog Devices’ 50-day is trading just above the 100-day, a sign that the intermediate-term outlook is strengthening. One more shift in the stock’s trends that attracts the technical buyers right now is the fact that the 50-day moving average is transitioning into an ascending pattern. Based on our historical testing, this doubles the chance that ADI stock will continue its rally to a 2:1 probability.
Analog Devices will face some chart resistance as it heads towards $84 as this is where we saw shares top out in March. In addition, ADI shares will be approaching a technically overbought reading at this price as well.
With momentum building, the stock is more likely to continue its trend this time around with a price target of $90.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.