The S&P 500’s 0.75% loss booked on Wednesday could have been worse, though not a lot worse. At one point it was down as much as 1.3%. Still, it was the fourth straight loss for the index, three of which were sizable. The market’s true strength is once again being called into question.
Apple (NASDAQ:AAPL) supplied most of the dead weight, falling 2.8% after Guggenheim lowered its rating on the stock while simultaneously lowering its earnings expectations of the company. PG&E (NYSE:PCG) was the biggest loser for the session, however, with the utility stock sliding 21.8% in response to the possibility that it may be at least partially responsible for the spread of California’s wildfires.
There were some winners. Advanced Micro Devices (NASDAQ:AMD), for instance, raced 6.1% higher for no reason in particular … other than the fact that it’s a name traders love to love. But, with declining stocks outpacing advancers by about two to one, there just weren’t enough names like AMD to get the broad market anywhere near positive territory.
As Thursday’s trading action kicks off, it’s the stock charts of Adobe (NASDAQ:ADBE), TJX Companies (NYSE:TJX) and Morgan Stanley (NYSE:MS) that merit the closest looks. Here’s the deal.
Adobe (ADBE)
A week and a half ago Adobe was one of the three stock charts put into focus, as shares were being forced into a retest of a key moving average line by the stock’s falling 20-day moving average line.
The bulls took one last shot at turning things around, but hitting a new but just-as-tough wall, they yielded pretty quickly to the bigger bearish tide. As of Wednesday, ADBE has broken below the first critical support level. One more bad day could break the last remaining floor.
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• A minor floor has taken shape around $231, marked with a red dashed line. If that floor snaps too, there’s not much left that will keep the stock propped up.
• Should the bears push Adobe over the edge, the next-best landing spot is the 38.2% Fibonacci retracement line near $208.
TJX Companies (TJX)
Shares of off-price retailer TJX Companies certainly had a good run earlier this year, but as of August the sheer weight of those gains proved problematic. The stock became range-bound, between $52.40 and $56.30.
Just a few days ago it looked like the stock was going to stage a breakout past the upper edge of that boundary. But, in just three trading days, TJX has moved dangerously close to breaking below that range instead. One more misstep could start a selling avalanche.
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• TJX Companies hasn’t yet broken below that floor though, nor has it broken below the 100-day moving average line, in gray, that has since stepped up as a potential support level.
• Though the gap is relatively small and only requires a move to $50.90 to fill it in, if that selloff gets started it may not be easily stopped. The next most likely landing point is around $47.
Morgan Stanley (MS)
Finally, Morgan Stanley shares have been in a well-defined downtrend since April. And, though technically oversold and arguably ripe for a reversal, the sheer bearish momentum has made it tough for the stock to even attempt a reversal. Wednesday’s action underscores that reality, setting the stage for even lower lows.
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• A close look at the volume trend, as evidenced by the falling accumulation-distribution line and the Chaikin line’s value under zero, clarifies that there are still plenty of sellers coming out of the woodwork.
• The downtrend has a pretty clear path to $40, give or take, where a major floor was made in early 2017. That value marks a 32% retracement from the stock’s peak, which should be enough to fully clear off the weak hands.
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.
