What started as a touch-and-go day certainly didn’t end as one. With some dovish words accompanying the Federal Reserve’s decision to stand pat with interest rates, the S&P 500 rallied 1.55% to the highest close since early December.
Advanced Micro Devices (NASDAQ:AMD) led the way, gaining almost 20% on a surprisingly encouraging 2019 sales outlook. Boeing (NYSE:BA) had a strong showing too though, rallying more than 6% after posting a fourth-quarter earnings beat driven by record-breaking sales of aircraft.
Welcome to earnings seasons.
Headed into Thursday’s trading, it’s the stock charts of Mcdonald’s (NYSE:MCD), Align Technology (NASDAQ:ALGN) and Facebook (NASDAQ:FB) that look like the best potential opportunities, mostly because they’re not dishing out the wild swings that turn trades into coin tosses.
In the middle of this month, Facebook shares were toying with a break above a technical ceiling around $146.30. That ended up happening, the very next day in fact, although another resistance line quickly stepped in to once again bar the rally effort.
Thanks to the pre-earnings rally, though, bolstered by the post-close gains in response to impressive fourth quarter numbers, FB stock has broken above a major short-term resistance level and widened the distance between it and the ceiling it smashed five weeks ago.
• Though it didn’t break to new multiweek highs during regular market hours, shares were trading around $162 in after-hours action. That’s well above the last of the remaining near-term ceilings around $151.50, plotted with a yellow dashed line.
• The weekly chart shows recent bullishness is actually just an extension of the rebound that took shape late last year and in the first week of this year. The falling resistance line that had guided it lower since the middle of last year was cleared, and for the most part the buyers didn’t look back.
With just a quick glance, the 0.22% setback Mcdonald’s shares suffered on Wednesday was nothing. Although the market was up and MCD wasn’t, shares of the restaurant giant have been strong performers of late. Things happen.
A closer examination of the bar Mcdonald’s shares left behind yesterday, however, is merited, as it suggests a major shift in how investors now see the stock.
• Zooming out to the weekly chart we gain some perspective on what’s taking shape here. MCD is still overbought from the November surge.
• Although the bar — called a doji — hints of a pivot, it’s not perfectly clear which direction the pivot is pointed. If it’s lower, that will be confirmed by a move back below the blue 20-day moving average line and the purple 50-day moving average line in the very near future.
Align Technology (ALGN)
Finally, yesterday’s 4.9% jump from Align Technology shares was well above average, but hardly jaw-dropping. The stock is still much closer to recently-hit 52-week lows than it is 52-week highs.
But, the shape and placement of yesterday’s bar from ALGN is telling in and of itself. Wednesday’s action looks like it could have been the much-needed jolt out of a rut and back into a recovery.
• Bolstering the bullish argument is the massive volume behind the decent gain. Many traders have been waiting in the wings to become buyers.
• Beckoning the stock higher from here is the gap that was left behind with October’s plunge. The upper boundary of that gap is around $289.50, though there’s a potential ceiling at $235.60 that needs to be cleared first.
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.