It was another win for the market on Tuesday, but clearly not as impressive as Monday’s. The S&P 500 ended Tuesday higher by 0.3%, having given up more than half of its intraday gain before the closing bell rang.
At the other end of the spectrum, Boeing (NYSE:BA) fell another 6.1% as the fallout from yet another 737 crash. Although the FAA affirms the new plane is still airworthy, investors are nervous that the plane has been banned in several countries.
None of them make for great trading prospects headed into this week’s hump-day, however. Rather, it’s the stock charts of Fifth Third Bancorp (NASDAQ:FITB), Brown-Forman (NYSE:BF.B) and Westrock (NYSE:WRK) that are of the most interest. Here’s why.
It’s complicated. Sometimes it’s not the first effort that puts a new trend in motion, but the second effort. And, sometimes it takes a jolt to make the bulls and the bears either put up or shut up.
That’s what’s unfurling with Brown-Forman right now … for the better. Last week’s breakout thrust was upended in spectacular fashion, but when faced with a choice to either try again or throw in the towel, the buyers tried again using the exact tools they needed to in order to get the rebound rally going in earnest.
Click to Enlarge • The bigger-picture buy trigger here is last week’s move above the white 200-day moving average line, and the cross back above it at the end of last week.
• The setback in between those two crossovers is just as telling though. Any non-believers were likely flushed out, but even before that day’s closing bell rang, the bulls were testing the waters again.
• The one thing missing with the rally effort is volume. It’s fading on the way up. It will need to rise on the way up if the rally is to last.
With nothing more than a quick glance, Westrock looks troubled. And, maybe it is. The past several turnaround attempts have all been thwarted, and relatively quickly. The last time was no different.
The last failed effort to turn things around, however, did highlight a slow but subtle shift for the better. This is the best rebound effort we’ve seen from WRK yet. There’s just a little more work to be done before getting over the hump.
Click to Enlarge • What’s different this time is the most recent low. For the first time since early 2018, Westrock hasn’t made a lower low. Last week’s low was in-line with last month’s, and above December’s bottom.
• The stall at the purple 50-day moving average line in nothing new. And, while Westrock technically closed above that mark yesterday, we’ve seen that happen before to no avail.
• It’s not easily evident with the accumulation-distribution line or with the Chaikin line, but there’s growing bullish volume here. There has been since November. The would-be buyers are out there, if they see enough persistent strength.
Fifth Third Bancorp (FITB)
Most banks have been on a roll of late, and Fifth Third has been no exception. But, most banks stocks aren’t moving into the same bullish scenario FITB shares are. One more good day could get the stock over a critical hump, and it’s starting that effort out on a very bullish foot.
There’s just one last ceiling that needs to be cleared.
Click to Enlarge • The ceiling in question is $28.07, plotted with a yellow dashed line on both stock charts. That’s where Fifth Third shares have peaked several times since November.
• It’s not yet over that hump, but it’s within striking distance. And this time, a move above that mark would also mean a move above the 200-day moving average, plotted in white.
• The work is starting with a strong tailwind. Yesterday’s volume was huge, suggesting a lot of bulls are waiting on standby, and the current surge was built by pushing up and off the support at the purple 50-day moving average line.
• The shape of the action since October also hints at an upside-down head-and-shoulders pattern, bolstering the bullish case.
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.