Whereas most stocks were mild movers with Wednesday’s modest gain, Thursday’s similarly sized pullback was backed by some stunning losers and winners. eBay (NASDAQ:EBAY) shares fell more than 10% in response to a disappointing second quarter report and equally disappointing guidance. BlackBerry (NYSE:BB), on the other hand, muscled its way to a 3% gain mostly on the heels of news that it was reviving phones with actual keyboard.
And those weren’t the day’s biggest movers, up or down.
Such shocks make it tough to get a bead on budding technical trends. In fact, today’s top prospects were Thursday’s relatively tame movers which weren’t yanked out of a budding trend (bearish or bullish).
Regions Financial (RF)
If Regions Financial rings a bell as a trading prospect, there’s a reason. It was highlighted as a bearish/shorting possibility back on July 6, when it broke under its 200-day moving average line as well as below a well-established horizontal support line.
RF shares didn’t immediately follow-through on the budding downside move… at least not very well. But, with yesterday’s weakness now in the books, the original call from two weeks ago is renewed.
Click to Enlarge • As of Wednesday it looked as if RF stock was ready to rebound, having crossed back above the 20-day line to top off a solid four-day rally. But, the rally was quelled on Thursday, with Regions Financial sliding all the way back under the original technical floors around $17.74.
• The undertow has never not been bearish, as it pertains to volume. The Chaikin line continues to work its way lower, though you don’t even need the Chaikin line to see heavy selling volume. Several of the tallest volume bars since June are red.
• We’ve already seen several bearish moving average crossovers, mostly in May and June. We’re just a few days away from the 20-day moving average line’s move below the 200-day average though. If that crossunder is allowed to happen, it will make crossing above either very, very tough to do.
Hormel Foods (HRL)
The past couple of years have been tough ones for food companies. Costs have risen, but competitive pressures have crimped pricing power with consumers. The end result has been a beleaguered industry that’s recently been forced into string of M&A. The prospects of mergers, in fact, has started to be seen as a bastion of hope for many of these names.
That includes Hormel Foods. Shares have been moving higher at a healthy — even if choppy — pace. After the bears squandered an opportunity to pull the rug out from underneath the stock’s advance by following through on Wednesday weakness though, more bulls and buyers should be drawn in.
Click to Enlarge • Thursday’s big gain was perfectly placed and perfectly timed, ultimately fueled by a kiss of the 50-day moving average line (purple) on Tuesday and a cross back above the 20-day moving average line (blue) yesterday.
• A rising support line has also been defined, tagging all the major lows since March and helping the stock log a string of higher highs.
• In the monthly timeframe we recently logged a bullish MACD crossover, and though they’re a different set of support and resistance lines, HRL has hurdled a key technical ceiling and found support at a key technical floor that took shape beginning at the November pivot.
Last but not least, retail REIT Macerich suffered the same bearishness most REITs did earlier this year when rising interest rates were treated like they were going to run rampant. But, investors have figured out rising rates aren’t the end of the world. In the meantime, the retail industry continues to get back on its feet.
MAC shares are riding that wave, and clearing one more hurdle could put the finishing touches on a budding uptrend.
Click to Enlarge• The key here is the shape of the chart since early this year. A falling resistance line has been cleared, and a rising support line has been defined.
• The make-or-break line in the sand is the 200-day moving average line (green). It’s kept recent rally efforts in check, but the bulls continue to test it, pushing up and off of other key moving average lines on Thursday to once again test it as a ceiling.
• In the monthly timeframe we just saw a bullish MACD divergence take shape, underscored by an upturn from the rising Chaikin line, telling us there’s plenty of bullish volume behind the new advance.
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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