Talk about a comeback! After hinting at a rekindled selloff of Monday, the bulls came back to the table in a big way on Tuesday. Yesterday’s close of 2,810.03 was a whopping 2.15% improvement for the S&P 500.
Advanced Micro Devices (NASDAQ:AMD) led the way, up 7.3% thanks to the fact that investors are falling back in love with tech stocks. Underscoring that idea was the 2.8% advance International Business Machines (NYSE:IBM) mustered before reporting its quarterly numbers after the closing bell rang … a bet that turned out to be a bad one. IBM tanked in after-hours trading in response to last quarter’s missed revenue estimates.
Whatever the case, the recent volatility has made it difficult to get a read on most stocks, as many trends have been disrupted and many lines have been crossed. Stock charts of Hartford Financial Services Group (NYSE:HIG), Pinnacle West Capital (NYSE:PNW) and Comerica (NYSE:CMA) are worth a closer look as Wednesday’s action begins — mostly because their developing trends are bigger than just the past few days.
Hartford Financial Services Group (HIG)
If it rings a bell, there’s a reason. Hartford Financial Services was a name put under the trading microscope back on Sept. 6, when the stock was toying with a break under a key support level.
That ended up happening, though not right away, and certainly not in a straight line. But, it did happen. Now HIG shares are flirting with another technical floor that, if broken, could set the stage for another run lower.
Click to Enlarge • The decisive break below the floor at $49.72 needed a little help, in the form of retests at the chart’s key moving average lines. Those retests are highlighted in blue.
• The current floor around $46.66, marked with a red dashed line on the weekly chart, is an extension of a support line established back in early 2017. The sellers are hesitating there, but if that floor buckles, there’s no other support line anywhere nearby.
• This is a setup that could still go either way, and needs confirmation in the form of a little more forward or backward progress.
Pinnacle West Capital (PNW)
Shares of regional bank Pinnacle West Capital have been all over the map of late, in an environment that’s been less than friendly to banks in general. If one takes a step back and looks at the bigger picture though, it becomes quite apparent that PNW is making net progress. And, thanks to Tuesday’s big victory, the buying floodgates may be about to open wide.
Click to Enlarge• It has largely been lost in the matter, but within just the past few weeks almost all of the shorter-term moving average lines have crossed above slower-moving ones. The only one that’s not yet happened is the blue 20-day moving average line’s cross above the purple 50-day line, and that one’s about to happen.
• On Tuesday, Pinnacle West Capital shares pushed back above a previous resistance line around $83, for a second time in a little more than a week. The bulls aren’t backing down.
• Underscoring just how much bullish interest is brewing up here, notice how the volume behind the last three days of gains has been rising rather than waning.
Last but not least, the past few weeks have been miserable ones for Comerica shareholders. The stock’s fallen more than 16% from its August high, and didn’t fully participate in Tuesday’s marketwide bullishness.
There are some curious hints, however, that a pivot out of a downtrend and back into an uptrend is in the works.
Click to Enlarge• Chief among those hints is the shape and placement of yesterday’s bar. It’s a doji, meaning the open and close are both right at the middle of a wide low-to-high range, which is often seen as a stock makes the transition from a net-selling to a net-buying environment.
• Underscoring that transition is a huge volume surge, suggesting a flood of sellers were getting out but a flood of buyers were pouring in. This is also common at key pivot points.
• The clues generally require some sort of confirmation, though not necessarily a screaming one. An “up” day today on decent volume would be enough to do the trick.
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.