The technology sector has been one of the better groups to be trading this year, as the Nasdaq Composite and Nasdaq 100 are outpacing the S&P 500 by more than double. While technology stocks have performed well as a group, some of the more notable names have been stuck in a bearish rut that has potential to worsen.
Today’s three big stock charts look closely at Intel Corporation (NASDAQ:INTC), Cisco Systems, Inc. (NASDAQ:CSCO) and eBay Inc (NASDAQ:EBAY), as their charts indicate technical tests that may lead to more selling and in one case, an opportunity to “buy the dip.”
Intel Corporation (INTC)
The semiconductor sector has been on fire for the year, as the group has returned more than 15% year-to-date. Despite the sector performance, Intel has remained a relative strength laggard and it appears that the situation could get worse.
After a mixed earnings results, INTC stock vacillated around $37 before the sellers stepped in to take shares to their current $36 and change. This is a critical technical test for Intel shares and their near-term outlook.
Intel’s 50-, 100- and 200-day moving averages all reside between the prices of $36.00 and $36.20, staging a technical test that will determine the next 5-10% move for INTC stock.
A break below these technical trendlines will target $34 for Intel stock, as the sellers will react to the triple technical break, which should be able to provide enough support for this technology bellwether.
The bull case, which is less likely, is that INTC stock finds support for a short period of time and rallies from the triple-barreled support. In this case, the stock should target a short trip to $37 and then reverse back to another critical test, which would be more likely to fail.
Bottom line is that there are much better stocks to pick from within this sector other than the best-known name of Intel.
Cisco Systems, Inc. (CSCO)
Another tech giant that is struggling to keep up with the market and its peers is Cisco Systems.
The networking giant has spent years trying to nail down the direction of product line and services, but the small moving networking companies have been more nimble to adjust to the fast-moving market.
Technically, CSCO stock took a beating after its latest earnings announcement, so badly that it moved almost instantly into a technically oversold condition. That has helped the stock from deepening its recent losses, but time is running out for the bulls.
The move in Cisco took shares below their 200-day moving average. The move has also put the final touches on transitioning the 50-day moving average of the stock into an intermediate-term bearish trend. This will add to pressure if/when there is a short-term bounce.
Traders will take their cue from CSCO stock’s ability to move back above the 200-day trendline within the next week or so. Currently, this moving average is sitting at $31.75 and starting to rollover itself, which would add more selling pressure to Cisco.
As if it weren’t enough, CSCO shares are also bouncing on their 20-month moving average. A close below this trendline will mark its official entry into a long-term bear market trend.
eBay Inc (EBAY)
Ebay shares find themselves in a better place from a long-term technical perspective. EBAY moved into a long-term bull market in mid 2016 and it has been on a tear. The 12-month returns for the online auction site run around 45%, which is threefold the S&P 500 returns.
From a short-term perspective, EBAY stock is flashing some warning signs that indicate selling on the horizon.
We’ve watched eBay stock consolidate in a volatile range since its earnings report in April. While the volatility has grown, we’ve watched trading volume decline, indicating that the technical traders are leaving the stock to drift for now.
EBAY shares’ 50-day trendline is currently posted-up at the $33.80-level and it is likely to get a test in the next week or so, as we have noticed some trading volume edging to the sell side.
With momentum shifting slightly to the downside, a break of this trendline will quickly target the $32.50-mark followed by a potential test of $31.75.
The good news for this old-school tech company is that the traders still see the fundamental value in EBAY shares and they will buy the dip on this name.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
