It was touch and go early in yesterday’s action, but as the day wore on, the bears wore out. The S&P 500 was up another 0.47% on Tuesday, closing at its best level in weeks, and testing the pivotal 200-day moving average line.
General Electric (NYSE:GE) did more than its fair share of the work, gaining 4.1% as the market continues growing its belief that the iconic company can dig its way out of trouble. Boeing (NYSE:BA) was up firmly too, gaining 3.3% on a combination of sheer momentum and word that it was investing in a supersonic jet outfit.
There were just a few too many names like Advanced Micro Devices (NASDAQ:AMD), however, to let the market run in a big way. AMD stock was down 3.4% following reports that a major shareholder unexpectedly sold nearly 35 million shares, suggesting the company’s future wasn’t clearly bullish.
Headed into the midpoint of the week, the stock charts of Conagra Brands (NYSE:CAG), Electronic Arts (NASDAQ:EA) and Intel (NASDAQ:INTC) are of particular interest. All three are at tipping points, but none of them are guaranteed to push past them.
Conagra Brands (CAG)
When Conagra Brands broke below a long-standing support level in December, a much faster, steeper selloff ensued … one CAG investors had seen and suffered before. Some shareholders were fearing Conagra was beyond help.
After finding a bottom in late December, though, CAG shares have served up a glimmer of hope. Tuesday’s gain further validated the breakout effort. Though it’s still not out of the woods, there are decent odds Conagra Brands shares are gearing up for a trade-worthy move.
Click to Enlarge • It’s subtle, but since the low made in late December, CAG has logged a trail of reliably higher lows. As of yesterday, the stock is testing the waters above a minor technical ceiling around $22.
• Underscoring the new buying interest is a surge in buying volume.
• If the budding rebound takes hold, the first upside target is around $27.70, and the next one after that is $32. Both are near Fibonacci retracement lines based on the span of the pullback between last year’s high’s and December’s lows.
Intel shares have been working on a breakout/rebound move since September, though to no avail. Each of them stalled at now-evident ceilings of $49.20 or $50.80. Both resistance levels are still in play, in fact.
As of Tuesday, though, INTC is closer to a true breakout than it has been in months. It just needs one more good day, though it’s not ideally positioned to log such a day today.
Click to Enlarge • Though Intel was once again able to test the ceiling at $50.80 and close above resistance at $49.20, the 6% gain logged over the course of the past three trading days will be tough to follow up without a small pullback first.
• Nevertheless, the tide is shifting for the better. We’ve seen higher lows since October’s low, and if you look closely you’ll see several bullish crosses of the key moving average lines.
• Don’t confuse any weakness or lull as a sign of a pullback. A breakout from here would be more of a process and less of an event. Look for support at any of the moving average lines, but the purple 50-day and the blue 20-day moving averages in particular.
Electronic Arts (EA)
At the very beginning of this year, Electronic Arts bounced out of a downtrend and looked as if it was going to make a full recovery. The rebound effort stalled roughly three weeks ago though, and EA shares have been range-bound ever since.
The good news? The range is well-defined, and a thrust out of it will be crystal clear if-and-when it happens. And as of Tuesday’s close, EA is in better position to make that move than it’s been yet. The bad news? The break out of the range may be in a downward direction.
Click to Enlarge• The recently established trading range is more or less between $87 and $93, plotted with white dashed lines on the daily chart. Electronic Arts was testing that upper ceiling at Tuesday’s close, right before earnings were released. Shares broke below the lower boundary in after-hours trading though, on a lackluster outlook.
• Also coming into view is the purple 50-day moving average line. One should assume it too is positioning to keep any breakdown effort in check.
• If the potential breakout takes shape, the most plausible target areas are $103 and $122, where the key Fibonacci retracement lines are found. As of Tuesday’s post-close trading though, most investors were looking in the other direction altogether.
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.