Reversing Wednesday’s drubbing, the bulls stepped up to the plate on Thursday and sent the S&P 500 higher to the tune of 1.86%. It was a firm effort, but not yet a game-changing one. The bulls were backing off a bit as the closing bell approached, and after Wednesday’s huge loss, some sort of bounce was inevitable.
Ford Motor (NYSE:F) shares did more than their fair share of the heavy lifting, gaining 9.9% in response to an unexpectedly strong third-quarter print. Twitter (NYSE:TWTR) provided a helping hand though, up 15% as its third-quarter earnings were up firmly and sales were better than expected despite a user-headcount headwind.
At the other end of the spectrum were names like Advanced Micro Devices (NASDAQ:AMD), which ended the day down more than 15% as the market processed the underlying meaning of the company’s disappointing revenue guidance for the quarter currently underway. Advancers outnumbered decliners by a ratio of 2.5 to one, however, minimizing the impact that AMD other losers were able to make on the broad market.
Regardless, the sheer severity of this week’s volatility still makes it tough to get a read on most stock charts. But, some careful scouring of all the major names brings Intel (NASDAQ:INTC), Apple (NASDAQ:AAPL) and Mondelez International (NASDAQ:MDLZ) to the forefront as trading prospects. Here’s why.
Intel shares were up firmly on Thursday after Wednesday’s move to multiweek lows, and made that gain on higher volume. It’s a pretty solid buy signal, even if there’s more work to be done with it.
Or, maybe it isn’t. If the market rekindles its bigger downtrend, it’s apt to take INTC stock lower with it, which could spark an even stronger selloff than the one we’ve seen since June.
• The backdrop is also already more bearish than it may seem on the surface. A closer look at the daily chart reveals all the key moving average lines have stopped and reversed rebound efforts at different times since June.
• Still, until that last floor breaks, it could be dangerous to make assumptions.
Apple was put into focus back on Oct. 11, when it took a tumble and put a critical support level to the test. The stock ultimately broke below that floor, but not cleanly enough to put a full-blown selling wave into motion. In light of what has not happened in the meantime though, we have to acknowledge the possibility that we’re still just one bad day away from the beginning of what could be a sizable pullback.
The former horizontal line in the sand was $216.30, but has since been lowered to $214.40. It’s only an approximation, or the average low for the past few weeks, but a line in the sand all the same.
• The weekly chart has already given us a MACD sell signal, which usually doesn’t happen until Apple shares are already en route to a lower low.
Mondelez International (MDLZ)
Last but not least, Mondelez International shares didn’t look like they were in too much trouble on Thursday, when they fell 1%. But, there are some subtle undertones in play here that suggest a little more weakness could trigger a sizable selloff.
• It requires one to take a step back and look at the bigger-picture weekly chart, but from that vantage point it’s clear that Mondelez is now in the early part of a downstroke within the confines of a falling trading range.
• Notice how the volume-based trend indicators on both stock charts indicate that the volume here has actually been net-bearish since late last month.
As of this writing, James Brumley held a long position in Ford Motor. You can follow him on Twitter, at @jbrumley.