It took a while to finally get the rally rekindled, but when push came to shove in late Friday’s action, the bulls got going. The S&P 500’s close of 2874.69 was a record.
Leading the charge was Netflix (NASDAQ:NFLX), up 5.8% in response to an upgrade from SunTrust analyst Matthew Thornton. Thornton believes last quarter’s slowdown in subscriber growth was the result of fixation on World Cup soccer. That won’t be a headwind again for four years. Advanced Micro Devices (NASDAQ:AMD) lent a hand as well, gaining 7.6% mostly in response to chatter that Intel (NASDAQ:INTC) may be further behind its rival than the market presently realizes.
Working against the market was a poor performance from Foot Locker (NYSE:FL). Shares of Foot Locker tumbled 9.2% after the company’s second-quarter sales rolled in lower than expected.
None of those names are the top trading prospects as the new trading week begins, though. Stock charts of Essex Property Trust (NYSE:ESS), Rockwell Collins (NYSE:COL) and Comcast (NASDAQ:CMCSA) appear to be your best bets. Here’s why.
Essex Property Trust (ESS)
This year hasn’t been an especially fruitful one for Essex Property Trust shareholders. Though the REIT has broken out of its bearish rut that upended it late last year, it has been unable to rekindle the rally that came to a screeching halt a little over a year ago.
That may be about to change though. Slowly but surely, ESS has been building up a head of steam that could fuel a breakout. One more good day could get it over a key technical hump, putting the slow rally thus far into a higher gear.
Click to Enlarge • The ceiling is $244.72. There was another one $243.68 (both are plotted on the daily chart) that marked several peaks made since March, but the upper one is the absolute resistance level.
• The 200-day moving average line (white) acted as a resistance point a few times once ESS stabilized, but shares have since moved above that line. In the meantime, the 50-day moving average line (purple) has moved within easy reach of a cross above the 200-day line. Hurdling it is a huge sign that momentum has fully turned for the better.
• On both stock charts, we can see the volume trend has turned bullish … perhaps a little more than the stock’s been heating up. The rebalancing of the mismatch would best materialize as a breakout thrust. There’s a fair amount of room to recover.
Rockwell Collins (COL)
At first blush it just looks like Rockwell Collins is chopping around in a sideways trading range. And, maybe that’s exactly what it is. But, the gradual deterioration of the stock even within that trading range is suspicious… especially in light of the big 2017 rally that’s left COL shares ripe for profit-taking.
Click to Enlarge • Though we’re still seeing higher lows, we have not seen any higher highs since the very beginning of this year. A technical ceiling has developed right around $139.23 (red, dashed).
• Although it’s usually a major support level, the 200-day moving average line (white) is not the big line in the sand this time around. COL shares have dipped below that line a few times since May. Though it’s about to pull below that line again, that in itself may not kick-start a steep selloff. It will take the first lower higher to confirm that the potential selloff has become an actual downtrend.
• It sounds like an outrageous downside target, but should the brewing pullback take hold, the Fibonacci retracement line at $117.19 is the most plausible floor in sight.
Last but not least, if the Comcast names rings oddly familiar in a trading context, the reason may be that we dissected its stock charts back on July 12. At the time, the stock was in the midst of a budding uptrend, and knocking on the door of a big ceiling at $34.21.
It’s since punched through, further solidifying that uptrend. In fact, as of Friday CMCSA has broken above another major technical ceiling, clearing the way for another bullish leg.
Click to Enlarge • The most recent ceiling was the 200-day moving average line (white), currently at $35.90. Pushing up and off the 20-day line (blue) on Friday, Comcast has broken above the line after trying to do so for more than a couple of weeks.
• The fact that Friday’s surge was made on higher volume is telling. More often than not of late, a lack of bullish volume has proven to be a liability.
• The new move could feasibly race to as high as $42, where CMCSA shares topped out a couple of times last year.
As of this writing, James Brumley held a long position in Essex Property Trust. You can follow him on Twitter, at @jbrumley.