The market followed through on Monday’s intraday reversal out of a pullback, logging a respectable 0.72% gain yesterday. But, it was anything but a whole-hearted effort. The S&P 500 gave back nearly half of its intraday gain on Tuesday, leaving investors still unsure about the true direction of the market’s undertow.
Bed Bath & Beyond (NASDAQ:BBBY) was a big part of the reason the market managed to end the day so deep in the black. Shares of the home goods retailer jumped 22% on news that three different activist investor groups were pushing to replace the entire board of directors of the struggling company.
Larger Qualcomm (NASDAQ:QCOM) likely drove market marketwide net gains though, even with a much more modest 2.4% gain. Shares of the telecom name were up following news that the company had (for the most part) prevailed in its patent infringement spat with iPhone maker Apple (NASDAQ:AAPL).
None of those names are particularly attractive prospects headed into Wednesday’s trading action, however. Rather, it’s the stock charts of Symantec (NASDAQ:SYMC), Chubb (NYSE:CB) and CarMax (NYSE:KMX) that are of the most interest. Each has worked its way to the brink of much bigger moves.
CarMax shares have had a pretty good past few days, but they’ve not made enough progress to be called “exciting.” There’s more going on here than it may seem with just a quick glance, however. Slowly but surely, the bulls are chipping away at resistance.
The effort is better backed than it may seem on the surface.
Click to Enlarge• KMX stock didn’t cleanly clear the technical ceiling at $63, but yesterday’s close of $62.88 was the first close above the gray 100-day moving average line since October.
• The past couple of weeks have also dished out a handful of accumulation days, or gains marked with high volume, with no distribution days during that time. The buyers are staying in, prompting a bullish turn from the accumulation-distribution line.
• Zooming out to the weekly chart, we see a bullish MACD cross, which has a strong history of signaling good runups.
Shares of digital security outfit Symantec have been all over the map of late, leaving behind several gaps — bearish and bullish — since May.
There has been a method to the madness though. Namely, a well-defined technical ceiling has been established. SYMC stock isn’t over it yet, the bulls continue to take their shot, and are within striking distance of it again as of Tuesday’s close. One or two more good days could do the trick.
Click to Enlarge • The line in the sand is around $23.60, plotted with a yellow line on both stock charts. That’s more or less where Symantec stock peaked several times since October.
• Fanning the bullish flames is an enormous gap left behind by May’s big plunge. Broadly speaking, traders don’t like to leave gaps unfilled.
• To that end, notice there’s also a bullish gap waiting to be filled from early February.
Chubb shares are well up from their late-December low, but that’s not terribly remarkable. Most stocks are.
However, the rebound from CB over the course of the past three months has been remarkably well organized, and formed a well-defined, tight trading range that has likely shaped what’s to come next for the stock. Barring an unexpected, unforeseen event, the outcome should be even more bullish than the past three months have been.
Click to Enlarge • The shape in question is a rising converging wedge pattern, plotted in yellow lines on both stock charts. The more the lines narrow, the more explosive the move outside of them will be.
• The new momentum is clearly bullish, but largely overlooked about the past few weeks is how the purple 50-day moving average line has crossed back above the white 200-day moving average for the first time since early 2018.
• Even if Chubb shares don’t break out of their narrowing range, the 2016/2017 advance says CB stock is no stranger to prolonged advances.
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.