3 Big Stock Charts for Tuesday: Bank of America, American Express and Marsh & McLennan

After Monday's riot, stocks are high on risk, but also high on reward

Tesla stock, TSLA

Believe it or not, not every stock was trashed on Monday. Campbell Soup (NYSE:CPB) managed a 9% advance on the heels or reports that rival Kraft Heinz (NASDAQ:KHC) was planning to make an acquisition offer.

But yes, most stocks did run into trouble, with growing concern that the threat of a trade war will become a reality. Harley-Davidson (NYSE:HOG) — one of the primary targets of new tariffs proposed by goods imported into the UK — tumbled to the tune of 9%. Meanwhile, Netflix (NASDAQ:NFLX) suffered a 6% setback on renewed concerns that it’s spending too much on content.

Most stocks, however, dished out a little less drama, and begin wiggling their way into a more predictable trading pattern. The top prospects among those less volatile names are Bank of America (NYSE:BAC), American Express (NYSE:AXP) and Marsh & McLennan (NYSE:MMC).

Bank of America (BAC)

It had more to do with marketwide weakness than company-specific trouble, but the fact that Bank of America shares were already in trouble heading into Monday’s action is a vulnerability that can’t be ignored.

Right or wrong, this weakness has been brewing for a while, and was finally unleashed in earnest.

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• It looked like the 200-day moving average line (green) was going to hold up as a last-ditch support level, but it snapped today. So did a horizontal floor at $28.86.

• Monday’s low of $28.28 is in line with the early May low, and could be a floor; we won’t know until at least today, if not later.

• If that floor around $28.28 breaks down, the nearest technical floor isn’t until $21.76, where BAC stock formed a base early last year from which we saw a strong move to March’s high. It would take a pretty significant setback to test that level as a floor, but nothing can ever be entirely ruled out.

American Express (AXP)

American Express (AXP)

The noteworthy (even if not earth-shattering) gain from American Express was prompted by news. In short, the U.S. Supreme Court tossed out a case that claimed the credit card company was unfairly preventing merchants from steering customers to other card companies.

The matter isn’t a terribly big deal, but the response in the stock price could have kickstarted a swing trade by the formation of a very specific pattern.

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• That is, Monday’s open was below Friday’s low, and Monday’s close was above Friday’s high. Monday’s bar completely engulfed Friday’s bar, with a move in the opposite direction … a strong sign of a major change of heart from traders.

• The strength of the engulfing bar is made even stronger by the kiss of the 200-day moving average line, followed by a decisive push up and off of it.

• Still, some measured progress all the way above the 50-day moving average line would set up a healthier, more reliable advance from here.

Marsh & McLennan (MMC)

Marsh & McLennan (MMC)

Last but not least, shares of Marsh & McLennan Companies look like they were already stuck in a sideways range, and since April have been pressed lower by a falling resistance line; it’s all framed by the red dashed lines on the daily chart.

That’s not necessarily a bad thing, however. After months and months of sideways consolidation, the tension is building for a breakout thrust.

Which direction? That remains to be seen.

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• The fact that MMC stock managed to hammer out a gain on Monday when other stock charts were taking a beating is noteworthy. So is the fact that Marsh & McLennan stock is testing the 200-day moving average line as a technical ceiling, and just moved back above the 50-day line.

• The “checkpoint” target here, if MMC breaks above the falling resistance line, is still the recent horizontal ceiling at $85.56. If Marsh & McLennan shares break above $85.56, there’s little that will be able to stop it.

• Conversely, if the uptrend doesn’t take hold, a break below the recent support at $79.42 is apt to start a chain reaction of selling. In that event, Fibonacci retracement lines at $71 and $62 become plausible targets.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.

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Article printed from InvestorPlace Media, https://investorplace.com/2018/06/3-big-stock-charts-for-tuesday-bank-of-america-american-express-and-marsh-mclennan/.

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