Reversing the disconcerting weakness seen on Monday, the S&P 500 hammered out a respectable gain on Tuesday. While the index’s gain of 0.54% and subsequent close of 2904.31 didn’t carry the market back into record-high territory, it did ease some concerns.
It can’t be ignored that as the closing bell approached, the buyers were backing off a bit. The S&P 500 had been noticeably higher mid-session, ultimately dragged down by General Mills (NYSE:GIS) and AbbVie (NYSE:ABBV). The former fell 7.6% following a disappointing earnings report, while AbbVie lost 2.9% of its value on Tuesday after regulators accused the company of offering illegal kickbacks.
At the other end of the spectrum was Amazon (NASDAQ:AMZN), which gained nearly 2% on the mere idea that it might get into the banking business. Netflix (NASDAQ:NFLX) jumped nearly 5% in response to Emmy nominations for a handful of its original programming.
None of those names, however, are particularly well-suited for trading day. Stocks charts of Procter & Gamble (NYSE:PG), BorgWarner (NYSE:BWA) and DISH Network (NASDAQ:DISH) are your best bets. Here’s a closer look at each.
Procter & Gamble (PG)
A little over a month ago Procter & Gamble was cheered for a cross above its 200-day moving average line, plotted in white on both stock charts, as it had the potential to be a catalyst for a more meaningful bullish move. The only concern was the potential resistance just a bit above its price at the time.
That technical ceiling ended up being a factor, halting the rally and sending it back to what had become a technical floor. Since then though, P&G shares have rebounded and moved back within striking distance of the big hurdle.
Click to Enlarge • The technical resistance in question is the Fibonacci retracement line at $84.40. PG stock kept marching to that line, but only had to kiss it to kick-start some profit-taking.
• The pullback from that peak is encouraging in itself, in that the stock found a floor right where it needed too… the aforementioned 200-day moving average line.
• While there’s still no assurance Procter & Gamble shares are going to clear the resistance at $84.40, second-wind efforts have a much better track record. Beyond $84.40m there’s not a lot to stand in the stock’s way.
BorgWarner shares were hit rather hard during the first half of the year, but since July, the bulls have held their ground. That’s not to suggest the bulls made progress, because they didn’t. The stock just moved sideways, framed by support and resistance lines plotted in yellow on the daily chart.
As of Tuesday though, the 2.7% setback has pushed BWA shares within reach of a major bearish tipping point. One more loss could break the tepidly-established floor and send the stock into a nosedive.
Click to Enlarge• The make-or-break floor is $42.03, plotted with a red, dashed line on the daily chart. That was a low once in June and once again in July. As of yesterday, it’s being tested yet again.
• Should that support level snap, there’s no clear technical support underneath that line until you get back to the sub-$30 area where 2016’s lows were.
• While Tuesday’s volume surge on a bearish day looks and feels bearish, be cautious of that interpretation. It could just as easily mean all the would-be sellers were flushed out, leaving behind only the buyers. This potential downtrend only means something if there’s confirmation of it, in the form of a break below $42.00.
DISH Network (DISH)
Last but not least, with nothing more than a quick glance it doesn’t appear DISH Network is back in an uptrend. And, maybe it isn’t. With a closer, second look at the chart, however, several bullish clues become more evident. The biggie, however, has yet to materialize.
Click to Enlarge • Though just a few months ago DISH was on the wrong side of all its key moving averages, now it’s resting above three of them. In fact, we’ve seen bullish crossovers from three of the four at the same time we’ve seen a string of higher lows and higher highs. The last of them is the 200-day moving average line, marked in white on both stock charts.
• Zooming out to the weekly chart of DISH Network puts this whole reversal in better perspective. Shares have broken out of the rut they were in between mid-last-year and early this year.
• It may sound insane, but there’s no real established resistance in place until you get back to last year’s peak around $66. Given that investors worst fears from last year were never realized — and that earnings are still intact — such a move can’t be ruled out, even if traders can’t have blind faith that such a rally will take shape.
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.