The market got the new trading week started on the same bearish foot it ended last week on, though Monday’s loss of 1.97% was bigger than Friday’s. Still, the volume behind yesterday’s pullback was lighter than Friday’s … an encouraging sign that conviction in the weakness is light.
Computer technology giant Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) led the sizeable rout of the tech sector. The former fell 7.7% while the latter slumped 9.6% for no particular reason other than investors are rethinking overwhelming bullishness that had driven them sharply higher through September.
Not every name was in the red on Monday, however. Opko Health (NASDAQ:OPK) was up 20.5% on surprisingly strong third-quarter numbers. There simply weren’t nearly enough names like Opko to fend off the overwhelming number of bears.
Regardless, a handful of stocks looks positioned to do what they’re going to do no matter what the overall market does. Stock charts of Scana (NYSE:SCG), Apple (NASDAQ:AAPL), Procter & Gamble (NYSE:PG) are a trio of such names.
If you’re looking for the biggest reason the broad market sold off today, start your search with Apple. Shares of the consumer-tech giant fell more than 5%, setting the tone and pace for every other name. Worse, AAPL shares are now at a critical make-or-break support line.
That’s hardly a guarantee of a meltdown. Indeed, there are a couple of good reasons to plan on a bounce here. It’s going to take one or two days to see which direction traders intend to take things. If the plan is to take Apple lower though, there’s not much hope for support anywhere near its current low.
- The make-or-break floor is the 200-day moving average line, plotted in white on both stock charts. AAPL stock hit a low there on Monday, but the bulls drew a line in the sand there.
- The strong bearish volume seen in the past couple of weeks is concerning, but there are now two bearish gaps left behind since the selloff began at the beginning of this month. Both beckon AAPL shares higher again.
- If the floor made by the 200-day moving average line snaps, the next best support area is $173, plotted with a yellow dashed line on the weekly chart. That floor’s tagged all the major lows since June of last year.
Back in late July, shares of utility company Scana were working their way out of a slump and putting new bullish pressure on their 200-day moving average line. It looked like the foundation for a prolonged bullish move. SCG never got over that hump in a convincing way, however, instead pulling back quite a bit in August.
The underpinnings for a breakout move never really went away though. Indeed, the pullback and subsequent rebound effort may have actually laid a better bullish foundation from which to launch.
- Thanks to the pullback, it’s become pretty clear there’s a floor around $34.70, plotted with a red dashed line on both stock charts. Likewise, there’s also a technical ceiling around $41.90, plotted in yellow.
- In the meantime, we’ve seen several key crosses of moving average lines that we hadn’t yet seen as of July. The bulk of those crossovers are highlighted in blue on the daily stock chart.
- The one thing missing so far is healthy bullish volume. The would-be buyers may only crawl out of the woodwork after SCG shares push about $41.90. Either way, it’s a prospect worth keeping tabs on.
Procter & Gamble (PG)
Last but not least, Procter & Gamble shares have been on a big tear of late, gaining 16% from their mid-October low. And as of Monday, PG stock has pushed above a major technical ceiling, and it did so on strong volume.
It may well be a clue that the stock is going to be catapulted upward at an even stronger pace. If that’s going to happen though, it’s a move that’s going to have to defy a rather severe overbought condition and break past another big-time technical resistance level. If that happens though, look out above.
- The level to watch first and foremost is right around $93.30. That’s where Procter & Gamble peaked on Monday, but that’s also more or less where the stock made a major peak in the latter half of last year.
- Though a huge hurdle lies above, the move above the rising technical ceiling, plotted with a white dashed line, that extends back to June has been broken — and broken with a lot of volume behind the move.
- While the odds tend to favor a wave of profit-taking rather than a bullish follow-through, if PG does break out, be prepared to take profits at the first sign of a slowdown. This isn’t a stock with a good history of prolonged bullish runs.
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.