The bulls did their best to make good on Thursday’s flimsy turnaround effort, but it just wasn’t meant to be. The S&P 500 lost 0.58% of its value on Friday, sliding back below a key technical line in the sand setting the stage for a bearish start to this week.
Tesla (NASDAQ:TSLA) did the most damage, falling 7.6% following news that its autopilot system was engaged during a fatal crash, on top of worries that a major cost-cutting initiative may be a sign of more trouble for the already-beleaguered company. Baidu (NASDAQ:BIDU) suffered the bigger loss though, tumbling 16.5% after the so-called Google of China booked its first quarterly loss in over a decade.
There was a handful of winners, although only a handful. Under Armour (NYSE:UAA) gained 7.8% in response to a bullish note from JPMorgan touted the athletic apparel company’s “controlled confidence” and the resulting potential for a 2020 turnaround.
The rebound Davita was trying to stage last month didn’t just falter. It broke, and then led into a high-conviction move to even lower lows. With Friday’s loss in the bag though, DVA shares may have just broken past the point of salvaging without making a much lower low first.
The good news is, there’s a pretty good idea about where that bottom will be made and the next rebound effort takes shape.
- The $49.50 level, plotted in red on the daily chart, was the last bastion of hope. That’s where Davita stock hit a low in March, but failed to find a floor last week.
- Notice all four key moving average lines are also now sloped downward, making it clear that the tide is bearish in all relevant timeframes.
- If DVA is going to find support anywhere, in particular, it’s most likely going to be around the support line that’s tagged most of the key lows evident on the weekly chart, going back to 2016. It’s currently around $46.50, but falling fast.
A month ago, Clorox shares looked like they would be in fine shape. Not only were they finding support at their 200-day moving average (highlighted) on the daily chart, they had just pushed up and off that line to start what appeared to be a breakout thrust.
The sheer severity of the plunge suffered on the first day of May is a major red flag in and of itself. But, what’s taken shape in the meantime makes bad news even worse. One more misstep could easily open the selling floodgates again.
- Following the early May tumble, a near-term trading range between $145.70 and $149.93 has taken shape, plotted with white dashed lines. This well-defined pause means the next move out of it could persist a while.
- Underscoring the bearish tide is Friday’s high volume behind the moderate selloff of CLX shares.
- Although it has not happened yet, the purple 50-day moving average line is close to falling under the white 200-day line. If that so-called “death cross” takes shape, it could spark a wave of programmed selling.
- Zooming out to the weekly chart we can see there’s a long-term support level around $111, but more than that, we can see Clorox may not find a firm bottom until the RSI indicates gets much closer to 30.
Expedia Group (EXPE)
A month ago, Expedia Group shares appeared to be back on top. They were rallying out of March’s lull, having pushed up and off a long-term support line that extends all the way back to 2015.
That move was ultimately quelled by a bump into what has since clearly become a near-term resistance line. The early May high of $131.71 lines up with the past two major peaks. The subsequent slide, however, isn’t like many of the prior ones that quickly stopped their bleeding.
- The chief concern here is how much bearish volume has materialized just since the stock started to sell off in early May. We’ve not seen it quite that persistent yet.
- Underscoring the budding bearish momentum is last week’s death cross, where the purple 50-day moving average line has broken below the 200-day average.
- Even so, there’s a technical floor currently just above $110 that has to be appreciated. It’s marked with a white dashed line on the weekly chart of EXPE.
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.