Thursday’s action may not have started out on the right foot, but it certainly ended the day on a high note. The S&P 500’s close of 2730.20 yesterday not only translated into a 1.08% gain, the win also ended a four-day losing streak that rekindled chatter about a brewing bear market.
Advanced Micro Devices (NASDAQ:AMD) and Bank of America (NYSE:BAC) led the way. AMD finished the session 3.3% higher as investors once again rushed back to the bullish side of the spectrum, though for the record, Advanced Micro Devices was down more than 6% in after-hours trading after rival Nvidia (NASDAQ:NVDA) posted disappointing third-quarter results. BofA was up 2.5% mostly because the market’s rising tide lifted banks first and foremost.
Among the most noteworthy losers was Walmart (NYSE:WMT), which slipped nearly 2% in response to a solid third-quarter print that still didn’t satisfy investors. Then again, the overheated rally Walmart investors enjoyed last month left it vulnerable to profit-taking.
The mixed-up market makes it tough to identify budding trends one can believe in, though the stocks charts of Lowe’s Companies (NYSE:LOW), HP (NYSE:HPQ) and Conagra Brands (NYSE:CAG) appear well positioned to do what they’re going to do regardless of how the overall market moves.
Technology giant HP isn’t an especially well-loved company, and investors aren’t exactly in-earnest fans of HPQ either. Yet, somehow this unloved outfit managed to keep drawing a crowd of buyers.
A closer look at both the weekly and daily stock charts may reveal a big part of the reason why. Right or wrong, irrespective of the underlying fundamentals, HP shares keep finding technical support in all the right places.
Click to Enlarge • There are two rising support levels. The most decisive one is the dashed white line that tags all the major lows going back to mid-2016. The other, less precise one is the 200-day line, plotted with a thicker, solid white line.
• HPQ stock is currently bouncing out of a stochastically oversold condition in the weekly timeframe, which has generally portended decent intermediate-term rallies.
• Notice there’s also a ceiling that runs parallel to the rising support line that will likely keep any rally from running too far. Packing will be the key to the distance of any uptrend.
Conagra Brands (CAG)
Conagra Brands has been all over the map of late, though that erratic action has been reliable and even predictable. And, though it’s a risky trade to step in now, it’s not a trade without a commensurate reward on the table.
And, between the shape of Wednesday’s and Thursday’s bar and the stock’s trading pattern since the beginning of this year, it may be a surprisingly smart pickup for a bullish swing trade.
Click to Enlarge • It’s easier to see on the weekly chart that the sideways trading range made earlier in the year has not only turned south, but widened. Either way, CAG shares have just touched the lower side of that range, leaving them ripe for a bounce.
• Thursday’s bar is telling. After a complete wipeout on Wednesday that left behind a very tall red candle, Thursday’s high-low range was oddly short, and the open-close levels were both near the top of the range. It’s a clue that the bulls may have already regrouped.
• Although it’s a high-potential trade, to confirm Thursday was indeed a pivot, Conagra shares need to log decidedly bullish follow-through today … as it has with past pullbacks.
Lowe’s Companies (LOW)
Last but not least, Lowe’s Companies shares are no stranger to wild swings, but much like Conagra’s, the swings have been oddly predictable and framed between well-established support and resistance levels.
LOW stock has fallen back to one of its technical floors, and so far, hasn’t been willing to slide under it. On the other hand, it hasn’t pushed up and off of it either, leaving it on the cusp of a big move one direction or another.
Click to Enlarge• The encounters with the technical floors and ceiling plotted with white dashed lines on the weekly chart largely coincide with the stochastic indicator’s overbought and oversold clues, hinting that a rebound is nigh.
• More recently, including on Thursday, Lowe’s shares have defined a floor at $91.37, marked with a red dashed line on the daily chart.
• If LOW doesn’t bounce back here and instead breaks below its support line near $91.70, there’s little left that could act as support.
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.