It was touch and go for the better part of yesterday’s action, as investors grappled with the prospect — but not the certainty — of an amicable end to the tariff war with China but the beginning of one with Mexico. The S&P 500 managed to end the day up 0.21%, but it was an ugly win, with most of the intraday gain being given back and the shape of the bar suggesting it could have been a pivot back into a pullback.
Advanced Micro Devices (NASDAQ:AMD) led the way with more than an 8% gain following whispers that demand for its new 7 nanometer processors was strong, though a broad rise in tech stocks stemming from encouraging trade news boosted that tailwind.
At the other end of the spectrum, GameStop (NYSE:GME) lost nearly 5% of its value after Bank of America Merrill Lynch analyst Curtis Nagle predicted “another tough year” for the video game retailer. The ongoing growth of cloud-based gaming is, Nagle believes, an ongoing threat to the brick-and-mortar game business.
Neither name is a particularly great trading prospect today, however. Rather, the stock charts of less-volatile HollyFrontier (NYSE:HFC), Citrix Systems (NASDAQ:CTXS) and Invesco (NYSE:IVZ) are shaping up as your best, more predictable bets. Here’s why.
In mid-March Invesco confirmed it was back in a new uptrend, snapping out of a bearish funk thanks to a completed upside-down head-and-shoulders pattern that carried IVZ above a long-standing (and falling) resistance line.
Shares started to peel back the very next day. But, over the course of the past week and a half the bigger-picture uptrend has been renewed, and is now even stronger and more convincing than it was before.
Click to Enlarge • The convincing clue is the way IVZ found support at the intermediate-term support line, plotted in red, in late March. That reversal is highlighted on the daily chart.
• We’ve also now seen two higher highs and higher lows since Invesco worked its way above the long-term ceiling that had been guiding it lower since March of last year. That resistance is plotted with yellow dashed line on both stock charts.
• Should this rebound effort continue to gain traction, the first real test is the $24.20 area, where the 38.2% Fibonacci retracement line awaits. Those Fib lines are the horizontal lines marked on the weekly chart.
Most oil names were down on Wednesday, in step with a pullback from crude oil prices. HollyFrontier was no exception to that weakness.
But, unlike most of its oil and gas peers, HFC stock has been fighting a losing battle since February, and really, since May. The stock’s one bad day away from sliding into an even more serious freefall, against a backdrop of multiple warnings.
Click to Enlarge • The last line in the sand is currently at $48.60, plotted in red on both stock charts. That floor has tagged all the major lows going back to early 2018.
• At the same time, HollyFrontier shares have been guided lower by falling resistance line plotted in yellow on both stock charts.
• It’s difficult to tell, until one sees the Chaikin line on the weekly chart. With its recent cross back under the zero level, it can be said there’s more bearish volume than not behind the bearish leg now underway.
Citrix Systems (CTXS)
In early March we pointed out Citrix Systems shares looked like they had made a major bottom. While they were just coming off a sizable loss, a familiar floor once again acted as support and suggested CTXS stock was still range-bound. That hint was on-target. Citrix stopped losing ground that day.
That result may have only postponed an inevitable showdown between the bulls and the bears though. After yesterday’s action, that battle may have just started, with the bulls winning the first round by default.
Click to Enlarge • Citrix Systems may have logged a healthy 2.35% gain on Wednesday, but that close of $102.48 was well off the high after a brush of the white 200-day moving average line repelled the buying effort.
• As the weekly chart indicates, a huge support line plotted in blue that touches all the key lows going back to early 2016 is still intact, but now under serious, sustained pressure.
• Simultaneously, there’s a horizontal floor at $98, plotted in green, that is still a factor.
• Although yesterday’s high-volume surge and partial pullback didn’t shake the stock out of a trading range, it’s a session that may force the bears and bulls to show their hands once and for all, and force a more prolonged move.
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.