Maintaining a focus on the fact that the market is entering one of the weaker seasonal periods of the year, traders are wise to maintain a vigil watch on any changing trends in the market. As of this week, we’ve seen an increase in the number of companies trading below their respective 50-day moving average, signaling that the market may be headed for some weakness.
Today’s three big stock charts takes a look at the charts of Fastenal Company (NASDAQ:FAST), Applied Materials, Inc. (NASDAQ:AMAT) and eBay Inc (NASDAQ:EBAY) as three stocks that the market should be watching as they fight it out with their critical 50-day trendlines.
Fastenal Company (FAST)
Fastenal has been a good proxy for the market and industrial companies as they provide products for all types of industrial applications. The company is in the process of falling back into a bearish trend that should have investors selling and traders shorting the stock.
- FAST shares have been struggling to try to break back above their 50-day moving average. The important trendline is beginning to shift back into a downtrend, which implies bearish conditions are revitalizing.
- Fastenal is also trading beneath its 20-month moving average which puts the stock in a technical bear market. This bear market trend targets a long-term price of $39.
- The recent consolidation and tightening technical pattern is setting FAST shares up for a sudden and volatile move. Given the bias of the 50-day moving average, this volatility will be to the downside and result in share prices that immediately move towards $41.
Applied Materials, Inc. (AMAT)
Semiconductor companies are seeing a flow of cash from this outperforming group back into financials and healthcare companies. The result is that these companies are now starting to see critical technical trends get challenged.
This applies more selling pressure and lowers price targets over the short-term. With that in mind, let’s look at the situation on Applied Materials.
- AMAT stock broke through their 50-day moving average trendline last week and have continued to see additional selling pressure from the technical traders.
- The move below the 50-day has this critical trendline transitioning into an intermediate-term bearish pattern that will target lower prices for Applied Materials.
- AMAT shares are also moving into bearish territory according to their MACD and other momentum indicators. At this point, the trend is turning on the technology company with the stock now targeting a price move to $39.
eBay Inc (EBAY)
Online auctioneer eBay had been holding a leadership role in the market and specifically in the technology sector, though the shares have been trading with increased volatility in comparison to the rest of their peers.
Now, EBAY shares are starting to slump and are at risk of falling into an intermediate-term bearish trend.
- eBay shares are trying to hold on to support at their 50-day moving average. Right now, this trendline is moving higher and still supports a bullish outlook. That said, a break below will begin to increase selling pressure.
- EBAY shares are also facing chart support at the $35.50. This level has acted as support and resistance for the shares in June and July. A break below this static price will also increase interest in selling the stock.
- Currently, a price target of $34 is in place from our models as the “buy the dip” price to focus on for those looking to add eBay shares to their portfolios.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.