The three-day losing streak for stocks was quelled yesterday and in rather decisive fashion. The S&P 500’s close of 2839.96 on Tuesday was 0.64% better than Monday’s last print, rekindling hopes that the large-cap index may reach record-high levels sooner rather than later.
Advanced Micro Devices (NASDAQ:AMD) did most of the heavy lifting — again — gaining 1.5% on the heels of the newly unveiled second-generation Ryzen CPU. Tapestry (NYSE:TPR) was Tuesday’s biggest notable winner though, advancing 12% in response to an impressive fourth-quarter report. Tapestry is the parent company of brands Kate Spade, Coach and others.
The winning wasn’t universal, however. Cannabis name Canopy Growth (NYSE:CGC) saw its share slide more than 7%, as investors continue to grapple with the high-risk/high-reward nature of marijuana stocks.
Headed into this week’s hump-day, Freeport-McMoRan (NYSE:FCX), Walmart (NYSE:WMT) and Skyworks Solutions (NASDAQ:SWKS) sport the most compelling stock charts … even if not all of those stock charts suggest those names are buys.
Here’s what to note.
Stock Charts to Watch: Freeport-McMoRan (FCX)
If Freeport-McMoRan rings a bell, there’s a reason. It was one of the focus stocks dissected in early August. At the time, FCX was toying with a rather serious breakdown but had not moved past the tipping point.
Now it has.
- The momentum is clearly to the downside, and has been for a while. The daily chart shows a steady string of lower lows and lower highs, framed by a pair of falling guidelines. The most meaningful of the lower ones just failed to reverse the pullback.
- While the bearish volume hasn’t been rampant, it’s certainly not been weak either. The Chaikin line is below zero for both timeframes.
- Most alarming of all is how this week’s lull has pulled FCX shares under a rising support line that tags all the major lows going back to late-2016. There aren’t any great floors in sight from here… just modest ones that can’t be counted as high-odds floors.
Stock Charts to Watch: Walmart (WMT)
Like most other retail stocks, Walmart tumbled in a big way early in the year, but has since started to test the waters of a rebound. In fact, it’s done so by forming an ideal technical pattern, pushing up and off support in all the right places.
There’s one last major hurdle to get over, however, and it’s about to take a shot at it. On the flipside, the effort thus far has one flaw that will need to be shored up for WMT to make good on all its promise.
- The series of highs and lows since June, framed by white dashed lines, is a pretty good converging wedge pattern. This has the potential to fuel a breakout thrust, compressing and suppressing volatility that will be unleashed once Walmart breaks out of that containment.
- The 200-day moving average line (white) is coming into view too. If it’s cleanly cleared, the bullish effort should get much easier.
- The missing ingredient here is volume – there’s not much of it. That might (and likely will) change if WMT can move above the 200-day average and break above the upper boundary of the converging wedge pattern. But, until we see more bulls start to plow in, the budding effort won’t be as healthy as it needs to be.
Stock Charts to Watch: Skyworks Solutions (SWKS)
Last but not least, Skyworks Solutions just looks choppy … with a quick glance. Take a step back, however, and there’s a method to the madness. The sellers are slowly but surely chipping away, and with Tuesday’s lull, the stock may have just moved past the tipping point.
- In March we saw a lower high, followed by a lower low in April. Since then, we’ve seen more frequent lower lows and less frequent lower highs, so much so that the 200-day moving average line (white) is now sloped downward.
- The volume has been net-bearish too. The daily chart’s accumulation-distribution line and the weekly chart’s Chaikin line are both trending lower.
- Skyworks’ last best shot at finding support was just wiped away. The 38.2% Fibonacci retracement line at $93.38 failed to act as a floor, opening the door to a move as low as the next Fibonacci line at $78.46.
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.