Election day was unsurprisingly tame, with most investors willing to wait at least one more day to make trades so they can make some decisions in light of who is (or isn’t) in office. The S&P 500 finished the session at 2755.45, up 0.63% for the day.
Advanced Micro Devices (NASDAQ:AMD) did a great deal of the heavy-lifting, gaining 3.9% mostly on reports that Amazon.com (NASDAQ:AMZN) was opting to use its Epyc server chips to support its cloud computing services. Mylan (NASDAQ:MYL) was the day’s big winner though, rallying more than 16% after posting third-quarter numbers that handily exceeded expectations.
There were losers too. Etsy (NASDAQ:ETSY) fell 4% before posting its third-quarter numbers after the closing bell rang. That turned out to be a big mistake though. ETSY shares were up 12% in after-hours trading thanks to a big earnings beat.
As for today’s top trading prospects, none of those names look all that inviting. Rather, it’s stock charts of Walt Disney (NYSE:DIS), Skyworks Solutions (NASDAQ:SWKS) and PG&E Corporation (NYSE:PCG) that rise to the top of the heap. Here’s why, and what’s apt to happen next … and what has to happen next.
Walt Disney (DIS)
With just a quick glance at the daily chart, Walt Disney is clearly making forward progress, but not in a straight line. No big deal. Stocks ebb and flow. It’s just part of the process.
When one takes a step back and looks at the longer-term weekly chart of DIS though, it becomes clear there’s more going on here than just a little bit of volatility. After months of churning, it’s clear that Disney shares are in a whole new groove that bodes very bullishly.
Click to Enlarge • The weekly chart isn’t tough to interpret. Walt Disney shares had been trapped in a converging wedge pattern since 2016, but just within the past several weeks broke above the upper boundary of that range.
• Though there are more (and bigger) “up” days than “down” days, the ebb and flow here has become pretty reliable. It’s unlikely we’ll see more straight line action in the future.
Skyworks Solutions (SWKS)
It’s been since August that we last looked at Skyworks Solutions. But, nothing’s changed in the meantime. The problems it was facing then it’s still facing now, and with a little more of the same, SWKS could slip even deeper into trouble.
There’s also a chance that its sheer oversold condition could set the stage for a bounce. Somehow though, given the bearish momentum in place, that’s a slim chance.
Click to Enlarge • The downtrend is still clearly intact, on both the weekly and the daily stock charts. Since August, the chart’s blue 20-day and purple 50-day moving average lines have helped keep the selling in motion.
• A test of the 61.8% Fibonacci retracement line at $78.50 appears imminent. If that line fails to hold up as a floor, there’s little that will be able to hold the next prospective wave of selling back.
• Notice on the daily chart how the recent selloff days have unfurled on above-average volume, while the “up” days have been on light volume.
PG&E Corporation (PCG)
Last but not least, back in mid-September stock charts of PG&E Corporation made their way onto traders’ radars, and for good reason. PCG was knocking on the door of a major technical ceiling around $49, which had kept a breakout at bay since April. Several bullish crosses of key moving averages had just taken shape, and the undertow looked almost perfect for a breakout. It clearly wasn’t perfect though … at least not yet. That breakout move faded, forcing the bulls to regroup.
They have regrouped though, and as of Tuesday the possibility of a breakout move is back on the table.
Click to Enlarge • The technical ceiling in question is plotted with a yellow dashed line on both stock charts. It’s now been tested five, and arguably six times. So far it’s not been snapped, but the steadily higher lows speak volumes.
• Also speaking volumes is the divergence of the moving average lines seen since the bullish crossovers from September.
• If the technical hurdle at $49 is finally breached, notice there’s no meaningful prior peak that’s apt to serve as the next technical ceiling until you get back to last year’s highs around $70.
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.