Traders get back to work this week after the Thanksgiving holiday lightened up the trading volume and allowed for some stock charts to get pushed around.
The market continues to act somewhat tepid, despite continuing to move to new highs. Last week, the S&P 500 closed the week above 2,600 for the first time, though we expect the round number to provide some short-term resistance.
The technicals are showing that the Nasdaq 100 has reached an oversold level, as an index. This means that there are many companies that may be preparing for another move lower.
Today’s three big stock charts takes a look at the charts for Analog Devices, Inc. (NASDAQ:ADI), Amgen, Inc. (NASDAQ:AMGN) and Symantec Corporation (NASDAQ:SYMC) as three companies that the bulls should be avoiding.
Stock Charts: Analog Devices, Inc. (ADI)
After trading to fresh highs after earnings, shares of Analog Devices are now pressing against intermediate-term technical support that must hold to avoid the stock falling into correction mode. Traders will want to watch two indicators on the stock over the next week.
- Amgen shares are hovering right at their 50-day moving average. For now, this trendline is heading higher which suggests bullish conditions. That said, a break below the trendline will increase selling pressure and target lower prices for the short-term outlook.
- Because of the recent pullback, the Chande Trend Meter has moved into neutral territory and is trending towards the bullish zone. This tells us that momentum has shifted from buyers to sellers.
- Analog Devices should see some technical/chart support as the stock approaches the $85 price. This is the price that we saw the stock post a double top in September as well as a $5 round dollar price mark. Expect to see buyers enter the market at this point.
Stock Charts: Amgen, Inc. (AMGN)
Biotechnology stocks have not been participating in the broader market rally as the indices are trading lower and below their 50-day moving averages. This suggests that the sector, in general, is one to avoid. Looking at the “stocks to avoid” among the biotech group, Amgen is on the list as the technical picture for the stock continues to erode.
- Since hitting its highs in September, Amgen has made a series of four lower lows and lower highs. This is a sign that a stock is under pressure from the trading community as traders sell into any rallies that the shares try to make.
- In early November, the 50-day moving average for Amgen’s stock turned bearish as the trendline rolled-over and started trending lower itself. The last time this happened was in April, when the stock saw a 10 percent correction.
- The $170 price level is what investors and traders should be watching. This round numbered support level is trying to hold Amgen shares at this time but a break lower will target a move to $160.
Stock Charts: Symantec Corporation (SYMC)
Symantec shares started to find some support after the earnings-related selloff, but that buying is likely to fall prey to some selling pressure soon as traders try to determine if the stock will hold its gains. So far, the oversold bounce has avoided turning into a Dead Cat Bounce, but there are some warning signs to heed.
- As mentioned, the stock hit $27.50 while the shares encroached an oversold reading from the RSI. This almost guaranteed that the stock would see a technical bounce. Now, the shares are running into a test as the 20-day moving average is ready to apply some technical pressure.
- Symantec shares are heading towards another chart test as the stock approaches $29. This price has acted as both support and resistance over the last year (very notable in the chart above) meaning that we should see traders use the price as a trigger to sell into the recent strength.
- Underneath, the $27.50 will have to hold shares to avoid a move that would likely force Symantec shares into a long-term bear market trend. A break below $26.25 would signal a bear market for the stock as this is where the shares’ 20-month moving average resides. Investors should watch for a move towards $20 if this happens.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.