The market is stumbling around a bit after earnings from Macy’s Inc (NYSE:M) and other retailers have traders in the profit-taking mood.
Today’s three big stock charts takes a look at Allergan plc Ordinary Shares (NYSE:AGN), Michaels Companies Inc (NASDAQ:MIK) and Cummins Inc. (NYSE:CMI), just three of the companies that our filters indicate as finding potential support while their shares are reaching short-term oversold conditions. This combination suggests that they may be ready to outperform the market as the market shores-up the selling.
Allergan plc Ordinary Shares (AGN)
Healthcare and Pharma stocks have been showing some relative strength in the market lately as earnings results have been slightly better than expectations.
This week, after a tepid earnings report, Allergan shares stumbled to find support at their 200-day moving average at $228. Helping support AGN stock is the fact that its 100-day trendline is at a similar price point, building double-barreled trendline support.
On the decline, shares of Allergan hit an oversold reading that hasn’t been matched since November 2016 just before the stock saw a dead cat bounce of more than 15%.
As of now, AGN shares will face some resistance at $239 from the 50-day moving average that is transitioning into a neutral outlook. Nonetheless, there’s room for a 5% bounce before that resistance kicks in.
Michaels Companies Inc (MIK)
As mentioned, retailers are taking it in the shorts right now as companies like Macy’s dropped horrible earnings results on the Street. Michael’s isn’t set to announce their earnings results until June 6, so there’s some time for the stock to rally ahead of the report.
Today’s trading activity has MIK’s dipping to its 100-day moving average, which has been transitioning into an intermediate-term bullish pattern. A hold at this mark will bring some technical traders into the mix.
Also of interest for the chart watchers is the fact that Michael’s stock has touched-down into technically oversold readings according to the RSI readings. Current readings match what we saw in February 2017, just a few weeks before earnings. This is a very similar situation to what we are seeing today.
The 50-day moving average for MIK is trending higher, adding to the stock’s bulling intermediate-term outlook. This means a move above the trendline, currently at $22.46, could draw more technical sellers to the market as buyers.
Cummins Inc. (CMI)
Cummins shares have long been on our bullish list, so we look for opportunities to buy the stock on dips. Such a situation looks to be forming for CMI right now.
After a short earnings-driven rally, Cummins stock has pulled back below $160 and the move has attracted Wall Street traders attention.
CMI stock has seen an increase in buying volume over the past week, indicating that the stock is being acquired on the dip.
Round-numbered resistance is in place at $160 for Cummins stock, but a break above the post-earnings high will likely start to bring some of the analysts that have been sitting on the sidelines (76% covering the stock have it ranked a hold) into the market with upgrades. Clearly, this activity will drive CMI deeper into new high territory.
As of this writing, Chirs Johnson, Johnson Research Group did not hold a position in any of the aforementioned securities.