Stocks managed to shrug off the weakness from last week, as traders came back from the holiday-inspired trading lull in a bullish mood. The S&P 500 ended the day at 2673.45, up 1.55%, led by General Motors (NYSE:GM). Shares of the carmaker jumped 4.8% on the heels of news that it was finally going to stop making poor-selling models altogether. GM had plenty of help though. Amazon.com (NASDAQ:AMZN) advanced 5.3% in response to what looks like yet-another record-breaking Cyber Monday.
Falling stocks, conversely, were few and far between. Winners outpaced losers by nearly two to one, and Monday’s bullish volume was more than three times stronger than bearish volume.
Nevertheless, some of the top trading prospects are still on the bearish side of the fence. Stock charts of TJX Companies (NYSE:TJX), Freeport-McMoRan (NYSE:FCX) and United Technologies (NYSE:UTX) are shaping up as Tuesday’s best bets, and two of those three are dancing with more downside.
Back in mid-August when we last looked at Freeport-McMoRan, we pointed out the downtrend was relatively well framed by falling support and resistance lines. Though there was more than one floor to note, they all combined to make on solid support area. That bearish “zone” has remained intact since then, while a new, steeper resistance line has taken shape.
Although it looks like things are on the verge of going from bad to worse for FCX, traders would be wise to respect the possibility that the recent encounter with a couple of converging support levels could spark a bounce.
Click to Enlarge • The three support lines, plotted with white dashed rays, are more or less aligned with one another and support one another. The falling resistance line that was in place as of August has since been replaced by an even steeper ceiling, both of which are plotted in yellow.
• Though the stage is set for a bullish push up and off of a major floor, Freeport-McMoRan will need to hurdle the lower of the falling resistance levels — currently at $11.60 — if that effort is going to go anywhere.
• The weekly chart of FCX shows a clear oversold condition, leaving FCX ripe for a turnaround.
United Technologies (UTX)
As of Friday, United Technologies looked ready to roll higher, crossing back above a couple of key moving average lines on huge volume. As of Monday though, the bears appear to be winning the war again. A bump into an established ceiling sent UTX back into the red on even bigger volume, indicating the market’s true opinion of the stock’s foreseeable future.
The good news is, there’s a plausible floor in sight should Monday’s stumble turn into something more.
Click to Enlarge • The rally effort was stopped cold with just a mere kiss of the purple 50-day moving average line and gray 100-day moving average line, the former of which crossed below the latter.
• Zooming out to the weekly chart of United Technologies it’s plain to see there’s support currently at $120.50, and rising. That floor is marked with a white dashed line. If that support fails to hold the stock up, there’s little left to keep UTX afloat.
TJX Companies (TJX)
Finally, back on Nov. 15 we noted TJX Companies was testing a major technical support area comprised of its 100-day moving average line and October’s low.
The floor didn’t hold up. Indeed, not only did it crumble, the next best likely support line also failed to keep the stock propped up. The bulls may get one more shot at pulling the stock up and out of trouble. If that doesn’t happen soon though — as in this week — any lingering owners may decide they want to go ahead and dump it too.
Click to Enlarge • The line in question is $46.90, plotted with a red dashed line. That’s where TJX Companies found a floor in June and July, but failed to find support there last week. In fact, that line acted as a ceiling yesterday.
• The big setback from TJX also dragged it below the pivotal 200-day moving average line plotted in white, and below the first (of two) big Fibonacci retracement lines around $47.70.
• If last week’s low of $45.43 is broken and TJX Companies shares are put into another nosedive, the next-best downside target is the other Fibonacci line at $42.20.
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.