The market mustered a modest gain of 0.19% on Monday, reversing last week’s sizable setback. Don’t be fooled though. Stocks struggled to hold onto their solid open, closing well below it as well as below the high for the day.
And, one can’t help but wonder how the day’s overall action might have panned out had it not been for Advanced Micro Devices (NASDAQ:AMD). The computer hardware maker jumped a bit more than 9% on some optimistic comments from Susquehanna. Stalwarts Apple (NASDAQ:AAPL) and Alibaba Group Holding (NYSE:BABA) both lost ground on Monday, with the latter falling more than 3% on news that CEO and founder Jack Ma was planning on stepping down next year.
Headed into Tuesday’s action, stock charts of Intel (NASDAQ:INTC), National-Oilwell Varco (NYSE:NOV) and ONEOK (NYSE:OKE) are worth the closest look. Though all three are seemingly setting up bearish moves, it’s the bearish setups that are looking best in this environment.
Intel shares have been in trouble since peaking in early June, partially because the outlook for computer technologies in general is weakening, and partially because Advanced Micro Devices has quietly been chipping away at Intel’s dominance (apparently for several quarters now).
As of Monday’s close, though, INTC is at a major breaking point. If that floor fails, the selling floodgates could be opened wide.
Click to Enlarge • The floor in question is around $46.20, where INTC has made a bottom a couple of times since July and may be making another bottom there right now.
• The odds of a rebound this time, though, are worse than they’ve been the past couple of times the stock’s been in this situation. This time around, we’re looking back at a so-called death cross. That’s where the 50-day moving average line, plotted in purple, falls under the white 200-day moving average line around $49.40. It’s the first time in a year we’ve seen this bearish scenario.
• There’s potential support around $42.60, which proved to be a pushoff point from late last year and early this year. There’s certainly no guarantee that’s going to end any selloff that may take shape from here.
National-Oilwell Varco (NOV)
It’s got more to do with the waning price of crude oil than it has to do with National-Oilwell Varco. The cause, however, is irrelevant. While the oil and equipment services outfit is well on the road to an earnings recovery, the weight of its gains through the first part of the year are proving problematic now, in this uncertain environment.
Click to Enlarge • The daily chart has already broken below a key rising support line on the daily chart, plotted with a white dashed line. Moreover, that break took shape after NOV made its first lower high in months.
• On the monthly chart we just saw the first bearish MACD divergence in months; the monthly chart also illustrates just how much the rising tide has reversed course since July’s peak and pivot.
• The clincher here is the still-growing bearish volume on the daily chart. Shareholders are rushing out en masse now, and the worse they make it, the stronger the selling gets, flushing even more sellers out.
Last but not least, if ONEOK rings oddly familiar, there’s a reason. It was one of the stock charts featured back on Aug. 30, when shares were toying with a break under a key support level.
That’s what happened the very next day, though very subtly. After Monday’s decisive breakdown though — and how and where it happened — there’s no going back now.
Click to Enlarge • That technical support was $66.54, plotted with a yellow dashed line on the daily chart. The next-best possible floor was $64.69, where OKE found a near-term low in May. ONEOK didn’t manage to find support there either though.
• Perhaps just as troubling, if not more so, is the fact that OKE tested the floor at $66.54 several times in the meantime. Monday’s kiss and failure to move back above it appears to be the proverbial last straw.
• If the bears really take hold, there’s not historical support until the stock slides back to the $56-ish area.
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.