Following through on Thursday’s recovery effort, the S&P 500 rallied another 0.67% on Friday to end the week at 2834.40. It wasn’t back into record territory. The advance doesn’t even bring the market decidedly back from the brink of a more serious setback. It’s a step in that direction though.
Newly minted Lyft (NASDAQ:LYFT) shares were up big in their trading debut, gaining nearly 9% on their first days investors flocked to the ride-hailing stock. Canada’s smartphone (and related tech) outfit BlackBerry (NYSE:BB) was an even bigger winner though, up 13.6% following a solid earnings beat and a better-than-expected revenue outlook driven by new technologies.
They weren’t all winners though. AstraZeneca (NYSE:AZN) fell nearly 6% on what was a relatively unpopular $6.9 billion bid for Japanese drugmaker Daiichi Sankyo.
None of those names are great prospects as the new trading week gets going though. Rather, the stock charts of Packaging Corp. of America (NYSE:PKG), L Brands (NYSE:LB) and Progressive (NYSE:PGR) are worth a closer look. Here’s why, and what to look for next.
Shares of insurance company Progressive aren’t exactly in dire straits yet. Although they’ve not gained any real ground since late February, they’ve not lost ground either.
Nevertheless, we’ve seen more poor closes than not from PGR over the course of the past few weeks, when the broad market was logging more bullish sessions than bearish ones. Overbought and within striking distance of a major technical floor, Progressive shares are just one bad day away from slipping into more serious trouble.
Click to Enlarge • The floor to watch is $71.60, plotted in yellow on the daily chart. That has been the big low for the past month, but Friday’s high volume selloff suggests the bears are going to give it the biggest test yet this week.
• On both stock charts, it’s clear there’s something about the ceiling around $73.60. Shares peaked there last month as well as in November.
• It’s subtle, but very telling all the same. That is, the weekly chart’s RSI oscillator rolled over last month without even being able to break back above the 70 overbought threshold. It’s a hint that the bulls never had much “umph” to begin with.
L Brands (LB)
It’s only a name to put on your radar for the time being. In fact, L Brands stock lost ground on Thursday and Friday, when the rest of the market was making forward progress. However, with almost three months of consolidation spinning up a potential thrust out of a converging wedge pattern, the potential upside here is just too big to ignore.
Click to Enlarge• The make-or-break line is $28.75, plotted with a yellow dashed line on the daily chart. The gray 100-day moving average line may also serve as resistance. If both are cleared though, the buying floodgates could open.
• Yes, we’ve seen both of those lines hurdled before, to no avail. In this instance though, the pace of the move out of the sideways range is slow and sustainable. Prior efforts have been too volatile to persist. The weekly chart really illustrates that idea, with very shallow buy signals from the MACD and Chaikin lines.
• While the potential upside is significant, this is a setup that will only be tradeworthy if L Brands shares can actually move to $28.80 or better.
Packaging Corp. of America (PKG)
Finally, Packaging Corp. of America shares aren’t over their key hump just yet, but they continue to swing at it, with each effort being a little better grounded and founded than the last. One more good day could get PKG over that technical hurdle and unleash a major wave of buying.
Click to Enlarge• The line in the sand is $101.20, plotted in red on both stock charts. Shares peaked there three times since late November.
• The $101.20 area is also where the pivotal 200-day moving average line, plotted in white, will be this week.
• Though we’ve failed tests at $101.20 before, this time is different. This time, Packaging Corp. of America stock is pushing up and off support at the gray 100-day moving average line. That pushoff is highlighted on the daily chart.
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.