All in all, not a bad week. Though the S&P 500 still logged a loss for the full five-day span, the index’s close of 2736.27 on Friday was well above the low, and left the market in good position to dish out some bullish follow-through.
PG&E (NYSE:PCG) was the most noteworthy winner for the day, up on the order of 38% as investors began to agree that it wouldn’t necessarily face financial ruin just for being implicated in California’s wildfires.
Among the names that weren’t pushed around by politics and one-off environmental disasters though, Applied Materials (NASDAQ:AMAT) mustered a 1.1% gain. It wasn’t a showstopper, but it was the biggest piece of evidence yet that the struggling stock is testing the waters of a turnaround. Making that possibility even more convincing is the fact that the gain took shape against a backdrop of a quarterly earnings miss.
Still, most stocks are in the same indecisive boat that the overall market is in. Choose carefully, looking for budding trends that don’t need the market’s help and won’t be upended by the market tide moving in the wrong direction.
One hates to bet against the king of social networking, but Facebook shares look like they’ve slipped into what has become a self-fueling freefall. That is to say, the worse things get, the more shareholders sell, and the more they sell, the worse things get.
The downtrend broke to new multimonth lows on Friday.
Click to Enlarge• The downtrend is evident on both stock charts and speaks for itself. Friday’s low of $137.77 is under the low of $139.03. And, a close look at the daily chart shows there’s rising volume behind the downtrend.
• The selloff is suspiciously well framed by falling support and resistance lines, plotted with white dashed lines on the weekly chart.
• Now that the March low around $153 has been broken, the next most plausible low that could become a landing point is the late 2016 low around $114.
Devon Energy (DVN)
It has probably got more to do with the broad demise of oil than with Devon Energy specifically, but, the root cause doesn’t really matter. What does matter is that with Friday’s 3.4% setback, DVN shares are now below what had been a huge, and hugely important, technical support level.
Click to Enlarge• The support line in question is $30.18, plotted with a red line on both stock charts. Though not with perfection, that level’s been a floor more than once since last year.
• It’s possible the 2017 ultimate low near $28.88, marked with a yellow dashed line, could end up acting as a floor, particularly with the weekly chart being so oversold. That’s not an assumption that one can afford to make blindly though.
• Whatever’s in the cards, it can and should take a few days for Devon shares to figure out where they’re headed next.
Finally, there’s no denying Exelon shares are rocketing higher. The stock’s gained nearly 7% in just the past month en route to multiyear highs, and the gain is still picking up steam.
If the past is any indication though, this rally could be about to run out of steam and reverse course in a big way.
Click to Enlarge• The daily chart’s persistent even if uneven rise is compelling. When one takes a step back and looks at the longer-term weekly chart though, it’s clear that Exelon stock is revisiting an established technical resistance line.
• It’s possible this encounter with the upper boundary of a rising trading channel could result in a different outcome than it has in the past, but there’s a suspicious lack of volume behind the move thus far.
• If EXC rolls over here, we can reasonably assume a trip back to the lower edge of the trading range is in the cards. It’s currently at $39.50, but rising fast.
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.