Tuesday’s start was a bit rocky, but by the time the closing bell rang the bulls managed to log another winning day, hopefully setting the tone for the rest of the week. The S&P 500’s close of 2682.20 was a 0.33% improvement, led by the 4.8% gain Advanced Micro Devices (NASDAQ:AMD) dished out for (once again) no specific reason.
The day’s big story, however, was the big bounce from PG&E (NYSE:PCG). Shares of the beaten-down utility stock gained 7.4%, as worries about its potential liabilities stemming from several of California’s wildfires continue to fade. Curiously though, there were more decliners than advancers on Tuesday, and yesterday’s action gave us more bearish volume than bullish volume. Leading the losers was Papa John’s (NASDAQ:PZZA), off by a little more than 10% on reports that a potential suitor was no longer interested in acquiring the dented pizza chain.
The still-bearish breadth and depth is concerning, and should prompt traders to keep their head on a swivel for the time being. In the meantime, stock charts of Amgen (NASDAQ:AMGN), Delta Air Lines (NYSE:DAL) and Mondelez International (NASDAQ:MDLZ) merit the closest looks at Wednesday’s action gets going.
Delta Air Lines (DAL)
Delta Air Lines has made a pretty nice run since early October, making a hard landing on Oct. 10 and immediately pivoting starting on Oct. 11. The 17% rally during that time, in fact, has some owners wondering of DAL shares have hit at least a near-term high.
It’s possible they have. But, if history is any indication, there’s a little more upside to go before this stock bumps into a headwind.
Click to Enlarge • There are some notable details on the daily chart of Delta, but it’s the weekly chart that offers the best perspective. DAL is trapped in a rising trading range, but has not yet bumped into the upper ceiling of that range.
• The upper boundary is around $61, though that ceiling is on the rise. Odds are good the stock will become stochastically overbought around the same time it hits the upper boundary of its range.
• In the meantime, notice we’re seeing a lot more bullish volume than bearish volume for the past several days. The buyers are emerging en masse, which bodes well for the current rally’s continuation.
Mondelez International (MDLZ)
A little over a month ago, Mondelez International made its way into our radar when it was unable to clear a key technical hurdle, and subsequently moved within sight of a break below a key technical support line. MDLZ stock ended up breaking below that floor the next day, but the depth of the dip was so great it turned into a capitulation, and then turned into a bounce. Mondelez has since punched through the ceiling it couldn’t clear a month ago.
More than that though, the stock has moved to new multiweek highs. A break above one more technical ceiling will likely further fan the bullish flames.
Click to Enlarge • The prior ceiling at $44.30, plotted with a red dashed line, where MDLZ peaked in July and September is no longer a threat. The only remaining ceiling is just below $45, where shares peaked a couple of times this month. That level is plotted with a yellow dashed line.
• Zooming out to a weekly chart, we can better see the scope of the recent bullishness. The falling resistance line that had been guiding Mondelez International lower since early last year is no longer a ceiling.
Finally, Amgen has made a healthy even if not explosive gain since late October. Given the hot-and-cold nature of the stock’s recent action, however, it may not be strength many investors are willing to plug into. They may be even more hesitant in light of the way the AMGN rally has stalled just below to key moving average lines.
When one takes a step back and looks at the longer-term trend though, not only is there a method to the madness, the uptrend may not be ready to give in just yet.
Click to Enlarge • The potential ceilings in question are the purple 50-day moving average line and the 100-day moving average line, highlighted on the daily chart.
• On the weekly chart of AMGN stock, it’s clear that the advance since 2016 is framed by rising support and resistance lines. We pushed up and off the lower boundary last month, but we’re still well under the upper edge of the rising trading range.
• As of right now, the top of the trading range is around $215, but is rising fast.
As of this writing, James Brumley held a long position in Amgen. You can follow him on Twitter, at @jbrumley.