It was only a 0.09% stumble for the S&P 500, but suspiciously, Thursday’s high was once again the same ceiling the market has been dancing with since mid-October.
Facebook (NASDAQ:FB) proved to be the biggest drag, slipping 1.9% in regular-hours trading only to slip another 1.9% in after-hours action following a myriad of less-than-great news. Not only is product chief Chris Cox stepping down, investors remain concerned about the social networking site’s major outage and now the company is dealing with a criminal investigation about the way it handled and shared some data. Dollar General (NYSE:DG) suffered a much bigger loss though, losing 7.5% after a disappointing fourth-quarter report.
There were some winners, like Snap (NYSE:SNAP), which gained 12.2% following an upgrade from long-term bear BTIG analyst Richard Greenfield. There just weren’t enough names like Snap to get the broad market over the hump.
As Friday’s trading gets started, it’s the stock charts of Lamb Weston Holdings (NYSE:LW), LKQ (NASDAQ:LKQ) and Medtronic (NYSE:MDT) that are worthy of a closer technical look. Here’s why, and what to look for.
Back in early January, Medtronic was pegged as a rebound candidate. Though the downtrend was strong, it was so strong it flushed out the last of the would-be sellers. A well-established support line was touched, bolstering the case for a bounce.
That happened exactly as expected. MDT shares roared back, crossing all the key moving average lines in the process. In fact, thanks to last week’s and this week’s action, the odds of even more upside were just raised.
Click to Enlarge • The key to the next leg up lies in the March 8 pivot, marked by a long-tailed low and indicated with a blue “up” arrow. That move washed out any doubters before the buyers went back to work.
• Zooming out to the weekly chart, we can see the underpinning of the bigger-picture rebound. The January low was made by an encounter with the same floor that sparked the past two major rebounds.
• The next most likely technical ceiling is around $94, plotted with a blue dashed line on the daily chart. Above that level, there’s little left to hold a rally back.
Lamb Weston Holdings (LW)
The bulls have been putting up a valiant fight trying to keep Lamb Weston Holdings shares from imploding. But after weeks of failure to get traction, the effort is collapsing. Yesterday’s 2.3% tumble has brought the stock within striking distance of a major technical floor, and the number of sellers continues to grow.
Click to Enlarge • The make-or-break line is $67.85, plotted with a yellow dashed line on both stock charts.
• Shares of Lamb Weston were already finding resistance at both moving average lines, but the purple 50-day moving average line recently crossed below the white 200-day line, creating a so-called ‘death cross’ that portends more selling.
• It has been subtle so far, but as is evident on the daily chart, we’re seeing increasingly above-average selling volume from time to time now.
Finally, at the very beginning of this month LKQ was highlighted as a bullish candidate. Although it had been trending higher at the time, a steep pullback immediately followed a sharp recovery move sent a clear message that the bulls were serious.
And they were. The stock edged a little higher the next few days. Though they peeled back in the meantime, over the course of the past couple of days the buyers have tipped their hand again. And, they’ve dropped ideal clues in the process.
Click to Enlarge • The key clue is the volume. The buying volume before and after the recent lull was on below-average volume, while the rally effort before and after was a high volume affair.
• Also note that we’ve made the first higher lows since 2018, as marked with a rising, blue dashed line on both stock charts.
• The clincher will be a cross above the 200-day moving average line, plotted in white, currently at $29.56.
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.