It’s beginning to feel like the market is heading into a grind sideways as we’re seeing mixed numbers from the averages on what feels like a daily basis. For weeks now, the technology leaders have seen continued selling as traders migrate into industrial companies while locking-in some healthy gains before year-end.
Today’s three big stock charts analyze the technicals of Alibaba Group Holding Ltd (NYSE:BABA), First Solar, Inc. (NASDAQ:FSLR) and Micron Technology, Inc. (NASDAQ:MU) as these three companies are signaling the potential for a short-term rally that may give them a much-needed boost.
Alibaba Group Holding Ltd (BABA)
We hit BABA last week as the stock appeared ready to take a dive. Low and behold, the analysis was dead-on as it went straight from $180 to $165. Now, we’re seeing some signs of buying, but there are a few hurdles Alibaba stock needs to overcome before declaring the “all clear.”
- BABA stock barely missed an oversold signal from its RSI earlier this week, but the fast-trading money appeared to be willing to front-run the signal as we’ve seen Alibaba shares bounce after hitting $165. It’s too soon to declare this a real bounce as volume is tapering.
- BABA shares have moved back within their Bollinger Bands as of today’s trading. This may signal that the volatility selloff that was triggered by the break below the lower band on Nov. 27 has come to an end. This would clear the way for short-term Alibaba bulls to start buying the shares on the recent dip.
- Overhead, the 50-day moving average for BABA stock lies in waiting to act as potential resistance. This will be the test that Alibaba bulls want to watch closely as the stock is likely to see some selling pressure
First Solar, Inc. (FSLR)
FSLR is in rally mode today as traders are reacting positively to its recent Investor’s Day. First Solar’s reaction has it entering a volatility rally as it breaks out of a multi-month consolidation.
With the long-term outlook for First Solar gaining momentum, today’s move appears to be the first in a rally towards $75 or higher.
- FSLR shares saw an interesting tightening of the stock’s Bollinger Band that rarely happens. The small spread between the bands indicated that a breakout was highly likely for this normally volatile stock. The fundamental news has resulted in a break higher, which has buyers in a frenzy now.
- Below current prices, the 50-day trend for First Solar stock is in bullish mode as it trends higher. This indicates that FSLR stock has more than a 2:1 probability to continue moving higher based on our historical testing.
- The Chande Trend Meter indicates that First Solar is in a bull market rally, carried by momentum that is likely to continue. Watch for the stock to quickly make a move above $70
Micron Technology, Inc. (MU)
Semiconductor stocks have been hit by the recent migration from technology as the group has been one of the strongest performers for the year. To some degree, the selling has been the result of profit-takers moving money into more undervalued areas of the market after a strong run.
In the last week though, Micron has given the technical traders reason to take notice of a short-term bullish opportunity based on its chart.
- We saw MU shares hit an oversold reading of their RSI on Dec. 4, as the stock hit its recent lows. The vacuum of selling pressure that occurred at that time has left Micron stock more open to an easy move higher with buyers now stepping in.
- While MU shares were hitting that oversold level they also fell on round-numbered chart support. The $40-level showed to be resistance in October ahead of its latest rally. This indicates that the same level is likely to act as support over the intermediate-term.
- Today, Micron shares are trying to regain ground above their 50-day moving average. A rally above this trendline, which is in a bullish pattern, will bring more technical buyers into the market and help push shares back above $44.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.