Dancing with a fairly significant stumble after losing ground on Tuesday and Wednesday, the bulls opted to renew their bullishness on Thursday. The S&P 500 gained 1.09% in yesterday’s action, leading the index to its best close since early October.
Apple (NASDAQ:AAPL) offered the biggest helping hand, gaining 3.7% as investors wade in before Monday’s event that will unveil its new on-demand video platform. Micron Technology (NASDAQ:MU) actually logged the bigger gain, however, advancing nearly 10% after posting second-quarter numbers that hinted at a turnaround taking shape in the second half of the year.
They weren’t all winners though. Biogen (NASDAQ:BIIB) plunged nearly 30% after the biopharma company decided to cancel the development of Alzheimer’s drug aducanumab due to its ineffectiveness.
None of those names are well suited for speculation as Friday’s trading action kicks off, however. Rather, it’s the stock charts of Morgan Stanley (NYSE:MS), Lowe’s Companies (NYSE:LOW) and AT&T (NYSE:T) that hold the most promise, as each is only on the cusp of moving past catalytic levels.
Morgan Stanley (MS)
This week has been an especially tough one for banking and finance stocks. News that the Federal Reserve was going to put the brakes on its rate-hike plans upended these names, as the higher interest rates on the radar had led investors to believe bank earnings would also grow. Now they’re not going to.
Curiously though, Morgan Stanley shares bounced on Thursday while most other financial names continued to lose ground. In context though, not only does the rebound make sense, it sets the stage for a major breakout thrust.
Click to Enlarge • The big line in the sand now is around $45, plotted in yellow on the daily chart. That’s where Morgan Stanley topped out the last two times it peaked.
• MS shares have also already made their way above the upper edge of a falling trading range that has guided shares lower since early 2018.
• Yesterday’s reversal took shape right as the purple 50-day and gray 100-day moving average lines were revisited. This is the ideal spot to stage rekindled bullishness.
Lowe’s Companies (LOW)
It has likely got more to do with the perceived rebound of the home-construction market and an encouraging outlook for remodeling spending this year. But whatever the reason, Lowe’s Companies shares have largely confirmed that the uptrend put into motions in January is the real deal.
Click to Enlarge • In December and January, the white 200-day moving average line acted as resistance. Once it was clearly in February though, it turned into support that prodded the current surge.
• We’re also nearing a so-called golden cross, where the purple 50-day moving average line moves above the 200-day average. This is often a sign of the beginning of a big bullish move.
• Zooming out to a daily chart of LOW, we can see the path is cleared for a move to the $125 area, where the upper boundary of the trading range in place since late 2017 awaits.
The past two and a half years have been miserable ones for AT&T shareholders. From a peak near $43 in late 2016 to a low of less than $27 in December of last year, this blue chip has been very un-blue-chip-like. It’s not like the past few weeks have offered any decisive hints that things are finally on the mend.
There are a handful of very subtle but very telling clues, however, that point to real bullishness ahead if T shares can work past one important technical ceiling.
Click to Enlarge • That ceiling is right around $31.40, where the stock peaked a couple of different times this year, and where the white 200-day line waits. The 200-day line has been a big problem for AT&T for a few months now.
• Backing out to a weekly chart we can see T shares have already made a move above the falling resistance line — plotted in yellow — that’s been guiding it lower since early 2018.
• Still, this is a stock that has given us bullish headfakes before.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.