Anybody who was hoping Friday’s drubbing was just a stroke of bad luck was sorely disappointed in Monday’s action. The S&P 500 lost another 2.1% of its value on Monday, reaching multi-month lows in the process.
There’s plenty of blame to go around, but Amazon.com (NASDAQ:AMZN) and Advanced Micro Devices (NASDAQ:AMD) bore the brunt of it. Neither did anything wrong, although Amazon did manage to run out of certain models of Echo Speakers. Rather, AMD was off 5.4% and AMZN fell 4.5% primarily because traders got spooked and those two high-profile names made for easy targets.
Amazingly enough, some stocks mustered a gain on Monday. Even more amazing is that General Electric (NYSE:GE) was one of them. It may be a subtle sign that shares have hit rock-bottom, and have no more ground left to give … maybe.
Headed into Tuesday’s trading, be careful. The tide and headlines look grim, and the momentum is certainly going to put bearish pressure on stocks. Of our three stock charts in focus, two of them — Juniper Networks (NYSE:JNPR) and Home Depot (NYSE:HD) are leaning bearishly and the third, Campbell Soup Company (NYSE:CPB), may only be up because everything else is down. Yet, the selling has been so strong it may ultimately be setting up a capitulation.
Juniper Networks (JNPR)
At the end of last month, Juniper Networks shares were pushing up and off a pretty significant support line that made up the lower edge of rising trading range. While the total upside may have been limited by an established technical ceiling, it looked like a reliable upside move. JNPR even got off to a good start with the rebound.
But, against an overwhelmingly bearish market tide, Juniper’s rebound has not only been quelled, JNPR shares have been dragged below that crucial technical floor. One more bad day could push the stock over the edge.
Click to Enlarge • A close look at the daily chart indicates that with Monday’s weakness, Juniper shares have fallen below the support line that has been guiding it higher since April’s low. The 200-day moving average line, in solid white, is the next and only technical floor lest.
• Underscoring the brewing bearish momentum is above-average volume for two of the past three days, each of which has been bearish.
• Though the weakness since October looks tepid, it’s better developed than it seems. By virtue of never developing much bullish momentum earlier in the year, we’ve now got a bearish MACD cross on the weekly chart.
Campbell Soup Company (CPB)
To be clear, it’s probably got more to do with marketwide weakness than it has to do with Campbell Soup Company. When the future looks bleaks, defensive names like food companies look like safe-havens.
The underlying reason is irrelevant though. If the tide for a particular chart is turning bullish, then it’s turning bullish. There’s just one more hurdle to get over.
Click to Enlarge • Since August, CPB stock has taken a couple of different shots at moving back above its 200-day moving average line, plotted in white on both stock charts. It’s not happened yet, but shares remained positioned to get over that catalytic line in the sand.
• In the meantime, Campbell Soup shares have already worked their way above falling resistance lines that extend all the way back to early 2017.
• Keeping the stock in position for a breakout is the newly confirmed rising support line that tags all the key lows going back to June.
Home Depot (HD)
Finally, back on Nov. 14 we pointed out Home Depot shares gave us an early glimpse of a potential bounce with a kiss of a technical floor. The only catch was, we didn’t get it. Rather, HD shares continued to edge lower, breaking that technical support in the process.
That’s a bullish clue in and of itself, though there’s one new floor that will need to be smashed before matters can officially go from bad to worse. Thing is, with the housing market facing a slowdown, HD stock is on the cusp of another wave of selling.
Click to Enlarge• The support line that was in place was $170.70, plotted with a red dashed line. It’s been broken, but since late last month the $166.66 area has kept to the stock propped up. It’s marked with a white dashed line.
• Zooming out to a weekly chart, we can see that not only is the $166.66 area a new floor, it was a minor ceiling late last year. If it fails to hold up as support, there’s no other nearby low to call a likely floor.
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.