Stocks have bounced back nicely from the ugliness of the last few weeks, with the S&P 500 returning to its 50-day moving average after bouncing off of its 200-day moving average. But some headwinds are appearing now, and with trading liquidity still very light, the machines are feeding some selling pressure at current levels.
I think a reversal and a possible test of the recent lows is likely. Especially with so many key large-cap stocks still on the mat after the big wipeouts earlier this month.
In response, here are four Dow Jones Industrial Average components that look set for another downdraft, as they’ve yet to really recover and are now vulnerable to the reappearance of risk.
Dow Jones Stocks in Trouble: Merck (MRK)
Merck & Co., Inc. (NYSE:MRK) shares are still down near the lows seen during the October-December trading range. The decline from the January high near $64 totals more than 13% as shares remain below both its 50-day and 200-day moving averages. This caps a long, rounded top pattern going back to late 2016 as drug prices remain a political hotspot for both Democrats and Republicans.
The company will next report results on May 4, before the bell. Analysts are looking for earnings of 98-cents-per-share on revenues of $9.9 billion. When the company last reported on Feb. 2, earnings of 98-cents-per-share beat estimates by 4 cents on a 3.1% rise in revenues.
Dow Jones Stocks in Trouble: McDonalds (MCD)
McDonald’s Corporation (NYSE:MCD) was hit hard by the selloff, falling back to lows seen in September for a decline of roughly 13% that it’s never really recovered from. Shares continue to cling to the 200-day moving average for dear life here despite a bevy of analyst upgrades in recent days.
The company will next report results on May 1, before the bell. Analysts are looking for earnings of $1.68-per-share on revenues of $4.9 billion. When the company last reported on Jan. 30, earnings of $1.71-per-share beat estimates by 12 cents on a 11.4% decline in revenues.
Dow Jones Stocks in Trouble: Johnson & Johnson (JNJ)
Johnson & Johnson (NYSE:JNJ) shares remain mired below their 200-day moving average after falling nearly 18% from their mid-January high. Prices are range-bound in the June-October range and are at risk of returning to the early 2017 range near $120, which would be worth a 8% loss from here.
The company will next report results on April 24, before the bell. Analysts are looking for earnings of $2.01-per-share on revenues of $19.4 billion. When the company last reported on Jan. 23, earnings of $1.74-per-share beat estimates by 2 cents on a 11.5% rise in revenues.
Dow Jones Stocks in Trouble: Home Depot (HD)
Home Depot Inc (NYSE:HD) — a perennial momentum favorite — was slammed 10% from its high and remains on the mat, motionless. Shares have been turned away repeatedly from resistance near $185-per-share and look set for a test of the lows near $175 despite a recent upgrade from analysts at Stifel.
The company will next report results on February 20 before the bell. Analysts are looking for earnings of $1.62 per share on revenues of $23.6 billion. When the company last reported on November 14, earnings of $1.84 beat estimates by two cents on an 8.1% rise in revenues.