It could have been worse. Though the S&P 500 ended Monday’s trade down 0.39%, at one point in the session the index was off by as much as 1.3% on renewed concerns about the ongoing tariff war with China.
Salesforce.com (NYSE:CRM) did the most damage, falling 3.7% after offering disappointing guidance for the year now underway. Eli Lilly (NYSE:LLY) chipped in too, however, losing 1.1% of its value on news that it was cutting the price of its insulin injection, Humalog, by half as a measure to quell criticism of its exorbitant price.
Facebook (NASDAQ:FB) was up 3.1% yesterday, though for no reason in particular. Investors are broadly beginning to see a light at the end of the company’s tunnel, rekindling the bullishness that took shape following last month’s earnings news.
D. R. Horton (DHI)
A couple of weeks ago, shares of homebuilder D. R. Horton were featured as a budding breakout candidate. Along with rival homebuilding stocks like PulteGroup (NYSE:PHM), DHI was wiggling out of a downtrend and into an uptrend. There was just a little more work to do.
There still is. D. R. Horton peeled back shortly after that look. But, between Friday’s intraday turnaround and Monday’s gain, DHI is back above a key technical line, and the bigger-picture uptrend remains intact.
Click to Enlarge • Thanks to the support offered by the purple 50-day moving average line on Friday (highlighted in blue), D. R. Horton has bounced its way back above the white 200-day moving average line.
• Zooming out to the weekly chart we can see this rally was ultimately started by a tough horizontal floor around $32.40, plotted with a yellow line.
• Even if DHI continues to rally, the daily chart’s showing a technical ceiling currently around $42, plotted with a blue dashed line. That resistance has capped all the runup efforts since November.
PPL has been another name we’ve had our eye on for a while, as a breakout candidate. With our last look from mid-November, shares of the utility name had punched through a technical ceiling at $31.16. It all came unraveled starting the very next day. For reasons that had little to do with PPL itself, the stock fell to nearly $27 by the middle of December.
That loss has been wiped away in the meantime. As of yesterday’s close, PPL is testing that November high. And this time, it’s got an even better start.
Click to Enlarge • The ceiling in question is $32.50, plotted in red on both stock charts.
• While it didn’t happen or held in December, in February the small dip found a floor at the gray 100-day moving average line (highlighted) to renew the rebound effort.
• If the $32.50 area fails to hold back the rally, the next upside target is near $40, where the stock reached highs in 2017.
CF Industries (CF)
Finally, shares of CF Industries have been largely left out of the market’s rally since late December, but they haven’t lost ground. Slowly but surely though, CF has worked its way to the brink of a fairly serious breakdown.
The good news is, the make-or-break level is quite clear. We’re at it as of Monday’s close.
Click to Enlarge • That line in the sand is at $41.52, plotted with a yellow dashed line on both stocks charts. That level tags all the key lows going back to December, including yesterday’s low.
• The tide is already bearish, however. The daily volume bars on bearish das have been notably higher for the past month, and the daily chart’s accumulation-distribution line as well as the weekly chart’s Chaikin line are both back in decided downtrends.
• Finally, though subtle (almost to the point of dismissible), the current bearish leg took shape after CF bumped into the gray 100-day and white 200-day moving average lines a couple of weeks ago … the same day the former crossed below the latter. The deck is now completely stacked against a recovery.
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.