Almost. The market almost worked its way back into the black yesterday, but not quite. The S&P 500’s close of 2650.54 was 0.02% below Wednesday’s closing price.
Thursday’s marketwide action may have ended a bit differently, for the better, had it not been for Advanced Micro Devices (NASDAQ:AMD). The computer hardware outfit’s stock lost a little more than 3% of its value after RW Baird cut its target price on AMD shares. Then again, yesterday’s winners didn’t actually do a whole lot of heavy lifting. General Electric (NYSE:GE) rallied 7.3% on the heels of news that it had sold another piece of itself in an effort to raise funds to pay down debt. But, GE’s market cap has been beaten down so badly in recent months that the big gain had little overall impact.
Such headlines continue to make for stocks that are best left avoided by traders, as they’re one headline away from an unexpected reversal. Rather, it’s stock charts like those of Duke Realty (NYSE:DRE), Delta Air Lines (NYSE:DAL) and Mattel (NASDAQ:MAT) that look like they’re working their way into something with a discernible outcome.
Delta Air Lines (DAL)
In late November we pointed out how Delta Air Lines shares were in an upswing that was ultimately rooted in a long-term trading range. Though there was some more upside in store, the stock’s potential rally was likely capped by an established resistance line that extends back to late-2016.
It all happened right on cue. The upper edge of the trading range was bumped, and DAL rolled over. Though it has lost a ton of ground in just the past few trading days, there’s still a little more downside room to navigate.
Click to Enlarge • The weekly chart speaks for itself. The trading range, framed with white dashed lines, has become alarmingly reliable.
• From here, if the pattern holds up, DAL could slide all the way back to $50.70, give or take.
• The odds of more downside are good though. The bearish volume since early last week has been decidedly greater than the volume behind recent bullish days.
Mattel has been dishing out misery to shareholders since 2016. Finally, in late 2017 it looked like MAT might finally be positioning for a recovery, but we’ve only seen a sideways grind. Still, it was better than lower lows.
Things took a turn for the worst on Thursday though, and with a relatively modest dip the stage has been set for more misery.
Click to Enlarge• The $12.68 level, marked in red on both stock charts, has been a rather reliable floor since late last year. Yesterday though, that support was pretty well smashed.
• Although it has been subtle, since late last year when Mattel started to make a floor, it was still logging a string of progressively lower highs. They’re marked with a white dashed line.
• The bulls will likely push back a bit not, but unless they can drag Mattel back above the $12.68 level, any subsequent rollover could be the beginning of another sizeable bearish leg.
Duke Realty (DRE)
Last but not least, though it’s still not clearly which direction the undertow is moving, Duke Realty us gearing up for a meaningful move.
Yes, it’s been stagnant since the middle of the year, and really, it’s only where it was trading in the middle of last year. The shape of the chart, however, is leaving DRE less and less room to wiggle. It’s going to be forced out of a narrowing range soon enough, with a vengeance.
Click to Enlarge • There are several ceilings in place right now, each with a different basis and timeframe. The nearest one is marked in red, and sloped downward. It’s at $28.80, and before anything, Duke Realty has to clear that one first.
• Also note the horizontal resistance line around $29.30, marked in yellow. That level more or less tags the peak DRE shares hit a couple times in recent months.
• The most fuel for an impending move, however, is the converging wedge patterns framed by white dashed lines on both stock charts. One side or the other will have to buckle soon.
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.