The trouble in Turkey proved to be more than investors were willing to ignore on Monday. The S&P 500 closed at 2821.93 yesterday, down 0.4%, marking the third consecutive losing session.
Ford (NYSE:F) did the most damage, tumbling 2.9% on continued worries about weakness in China, with the bearish flames fanned by concerns that its aggressive cost-cutting plans could do more harm than good. At best, shareholders are skeptical.
Not every major name lost ground on Monday. Advanced Micro Devices (NASDAQ:AMD) shares bounced 3.5% mostly because traders love to cheer AMD, while Huya (NYSE:HUYA) was up 2.1% because the relatively new and relatively small ADR was in the right place at the right time. Those winners, however, just weren’t enough to lead the broad market into the black on Monday.
None of those names are your top trading prospects as Tuesday’s action begins either. Worth a closer look today are stock charts of Micron Technology (NASDAQ:MU), Tapestry (NYSE:TPR) and PPL (NYSE:PPL). Here’s why.
Stock Charts to Watch: Micron Technology (MU)
Micron Technology was all the rage in 2017, and even into early 2018. With the weight of all those gains though, against a backdrop of an impending glut within the computer memory chip market, the deck is stacked against MU here. In fact, one key floor has already buckled. Once another one snaps, a flood of profit-taking could be unleashed.
- A string of lower highs has already created some clear downward momentum.
- The weekly chart of MU illustrates just how much ground was gained since late 2016, pointing to how much ground could be given back if the last of the key technical support lines buckles.
- The support line that’s been broken is a ray that tags all the major lows made since August of last year. The next one — and the last one — is the 200-day moving average line currently at $49.88.
Stock Charts to Watch: Tapestry (TPR)
Never heard of Tapestry? Actually, you probably have.
It’s the company that owns Coach, Kate Spade and Stuart Weitzman. The company took the name Tapestry in October of last year, mostly to reflect the fact that the organization was more than just its old Coach moniker.
But, that’s beside the point. The point here is, Tapestry shares are caught in a surprising persistent and consistent pattern, and have just kick-started yet another bullish move from a major support line.
- The fuel for the brewing rally is at least partially supplied by the early May plunge that left behind a sizeable gap. Traders, generally speaking, don’t like to leave gaps unfilled. Before the gap can even be partly filled though, the technical ceiling near $48.65 has to hurdled.
- The weekly chart readily shows the rising trading range that’s guided the stock higher since early 2017, framed with dashed white lines. TPR stock has found support at the lower of those lines, and has begun to trend upward again right on cue.
- The upper boundary of the trading range is currently at $59, give or take, leaving lots of room for a recovery move.
Stock Charts to Watch: PPL (PPL)
Last but not least, the reason shares of utility company PPL are testing the water of higher highs could be one of two things. Either the company’s fortunes are improving or investors are searching for safe-haven stocks … or both.
The reason in this context, however, is largely irrelevant. PPL stock is setting up for a move that could be quite explosive. It just needs the right nudge.
- The daily chart shows two horizontal resistance lines in play … one at $29.16, and the other at $29.74. Both will need to be cleared to get the rally going, but neither has been hurdled yet. If and when they are though, then weeks’ worth of sideways action could release a load of pent-up bullishness. The 200-day moving average line (white) at $30.17 could also be another key hurdle/trigger.
- It’s not a perfectly-shaped one, but the pattern seen since March more or less looks like an upside-down head-and-shoulders pattern. If the neckline made up of the two technical ceilings is broken, the end result is once again a bullish thrust.
- Zooming out to a weekly chart we can see that the sellers overshot, sending the stock from $40 in late 2017 to $25 in June. There’s a lot of ground to recover.
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.