The market is seeing some serious splits in performance both at the sector and the stock level. This is typical for summer trading as we usually see the environment turn more into a stock pickers game.
Today’s three big stock charts look at Pfizer Inc. (NYSE:PFE), Wal-Mart Stores Inc (NYSE:WMT) and Costco Wholesale Corporation (NASDAQ:COST) as they are presenting clear technical outlooks that should help traders generate profits.
Pfizer Inc. (PFE)
The pharmaceutical sector is hitting a stride now as the market is feeling like some clarification on healthcare reform. This sector has seen the correlation of returns among its members decline, meaning that it’s a stock pickers sector with Pfizer making its technical move.
- PFE shares broke into a volatility rally last week when the stock broke above its top Bollinger Band. This has caused an increase in the buying volume on Pfizer stock and is targeting a move towards a breakout above $35.
- Shares have recently moved into a technically overbought situation as the RSI for PFE shares is now registering readings above 70. As long as the stock is trading above its top Bollinger Band, the oversold readings should not hold shares from their climb.
- The break above $34 takes Pfizer above historical long-term resistance/support according to its monthly chart. We should see a target of $36 in the near-term based on the move above this chart resistance.
Wal-Mart Stores Inc (WMT)
Retailers have been in the dumps lately as the brick-and-mortar companies are fighting with the online retailers over investment dollars.
Walmart is one of the companies that has been straddling the cyber/mortar divide, which has allowed the stock to outperform. Last week’s decline appears to be opening a technical opportunity worth a closer look.
- WMT’s short-term charts are indicating that the stock is coming out of an oversold reading from its RSI. The last instance of this was in January ahead of a rally from $65 to $70.
- Walmart stock is currently attempting to break back above its 50-day moving average. This trendline remains in a bullish pattern, which means that WMT stock should see a surge in buying activity when it emerges from trading below this trendline; $76.50 is the price to watch here.
- From a long-term perspective, the stock shows chart support/resistance at $75. This should provide long-term support for the stock, giving the technical traders a “safety net” of support.
Costco Wholesale Corporation (COST)
The other side of the retail battle is Costco, which is breaking through critical technical support that should concern traders.
- COST shares are in the middle of a volatility selling spree as the shares are now solidly trading below their bottom Bollinger Band. Costco stock is likely to maintain this course as volume remains heavy.
- COST stock is now approaching $160, which you can see from the monthly chart below is a critical chart support level. A break below this price will target another round of selling that will target $140.
- Costco shares are deep in oversold territory, indicating that the current volatility selloff may get the benefit of at least a “dead cat bounce.” Watch closely as this rally could send shares to $165, where our models suggest COST stock would reverse lower again.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
