For the better part of Monday, stocks were in the red. Once push came to shove as the closing bell approached, though, yesterday’s move to new multi-months lows was negated. The S&P 500 finished at 2637.72, up 0.18%.
It’s a start.
Qualcomm (NASDAQ:QCOM) led the charge, up 2.2% mostly in response to news that it won a key court case which will prevent the sale of older iPhones in China. Veritone (NASDAQ:VERI) was the day’s big winner, however, gaining 22.5% after Apis Capital announced its intent to outright acquire the artificial intelligence software company.
There were losers, of course. Teva Pharmaceutical (NYSE:TEVA) was off to the tune of 5% on the heels of news that a probe into generic drug price-fixing was being expanded. It’s hardly evidence, but implication was enough.
Headed into Tuesday’s session, stock charts of Micron Technology (NASDAQ:MU), Fortive (NYSE:FTV) and Morgan Stanley (NYSE:MS) are worth a closer look. Here’s why.
Micron Technology (MU)
Three weeks ago we pointed out how Micron Technology shares were trending lower, framed by a well-defined falling trading range. The stock tried to punch above the upper edge of that range earlier this month, and almost did. But, the ceiling ultimately won that fight. As of Monday, MS stock is back in that bearish groove.
It may well be en route to the lower edge of that trading range again, but if it is, there’s a much bigger technical support line that will have to snap first. If that floor breaks, however, the bigger-picture trend may move beyond help anytime soon.
• Though evident on the daily chart, zooming out to a weekly chart of MU indicates just how well-developed the current downtrend is.
• Should the $34 line fail to hold up as a floor, the next best bet for support is the August-2017 low around $27.50.
With nothing more than a quick glance, Fortive shares look like they’re in trouble. Though they dished out a nice gain yesterday, the bigger trend is bearish and the bump into a couple of technical ceilings last week says the bulls aren’t ready to commit.
Regardless, there’s a good news/bad news situation in place for FTV right now. Fortive may have just defined a line in the sand … and proven it’s a floor. That well-defined support, however, could ultimately be a setup for a meltdown if it ends up being broken.
• Although stochastically oversold in the weekly timeframe, this is a case where if the floor around $69 crumbles, there’s no other floor nearby.
• Nevertheless, we have to respect that the support level is still intact. As long as it is, there’s enough of a chance that the second effort could finally drag the stock above the purple 50-day line and white 200-day moving average line.
Morgan Stanley (MS)
Finally, a week ago it was explained that while Morgan Stanley shares were trending somewhat higher, the outlook wasn’t encouraging. It had just bumped into a long-term resistance line that had a history of sending MS to even lower lows.
That happened. Morgan Stanley fell back to a new multiweek low on Monday, stopped by an encounter with a technical floor that also extends back to March’s low as well as a bump into a support area that meant so much in early 2017. This is a make-or-break moment, and it’s still not clear which path MS shares will take.
• While Morgan Stanley is holding up so far and in a good technical position to turn around, notice how much bearish volume has crawled out of the woodwork just in the past few days as MS has formed yet another lower leg. In fact, the selling volume has been building for months now.
• Don’t jump the gun. It could take a while for the bulls and bears to grapple here and declare a winner. The stock’s next direction will be clear once it takes shape, and should be a more prolonged move.
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.