A nice rebound on Wednesday, with the S&P 500 mustering a 0.59% gain to end the session at 2,850.96. But, the effort stopped at a familiar technical ceiling, and the volume behind the move was never impressive. The bears may still be quietly in control.
Amazon (NASDAQ:AMZN) did more than its fair share of heavy lifting, gaining 1.7% mostly on the heels of a reminder that Berkshire Hathaway has taken a big stake in the e-commerce company. Smaller outfit Trade Desk (NASDAQ:TTD) dished out the bigger gain though, rallying another 7.9% to bring its two-day tally to 13% after the market had a chance to chew on last quarter’s numbers.
Holding the market back, more than any other name was Overstock.com (NASDAQ:OSTK), off nearly 16% in response to reports that CEO Patrick Byrne sold a sizable chunk of his stake during the first quarter of the year.
Headed into Thursday’s session, however, it’s the stock charts of Mohawk Industries (NYSE:MHK), Raytheon Company (NYSE:RTN) and People’s United Financial (NASDAQ:PBCT) that are of the most interest. They look closer to the beginning of big moves rather than at the end of them.
People’s United Financial (PBCT)
Most bank stocks were in the red on Wednesday, for industry-specific reasons, and People’s United Financial was no exception to that bearish tide. But, PBCT stock was an exception in the sense that its pullback was considerably bigger than those booked by other banking names, and the scope of the move itself did some serious technical damage to this particular stock that wasn’t done to other tickers in the same group.
A couple of different times this year it appeared PBCT would be able to break away and rally. This week’s second blow, however, may discourage a third rebound effort.
- Not only are People’s United Financial back under all of their key moving average lines, but the most recent selloff days have also all been on above-average volume. The gains have been on light volume.
- Although we just made the opposite signal, the purple 50-day moving average line is nearing a cross back below the 200-day moving average line plotted in white on both stock charts. That would be a so-called ‘death cross.’
- The weekly chart is one bad day away from giving a bearish MACD cross, which has historically been a good signal of more trouble.
Mohawk Industries (MHK)
Last year was a miserable one for Mohawk Industries shareholders. The stock peaked near $287 in late 2017, and by December of 2018 was at lows near $109.
MHK shares have since stopped the bleeding, but they haven’t recovered. They’ve not even dropped clear hints of signs they could recover. Investors willing and able to look past the overt clues and pay attention to the more subtle ones, however, have good reason to put Mohawk Industries back on their watchlist.
- It’s been intermittent and inconsistent, but all of the short-term moving average lines are now acting as technical support. This provides a pushoff point for the next bullish effort.
- The line in the sand is, give or take, $144. That’s where the 200-day moving average is, and that’s where the February surge topped out.
Raytheon Company (RTN)
Raytheon Company shares got the new year started on the right foot, along with most other stocks. Unlike most other stocks though, that advance was stopped in its tracks in late February. Although a floor appears to have developed right where it should have, the ceiling appears to be even better developed now than it was then.
Whatever’s in the cards, the make-or-break lines are well-defined, and should be heeded. And, for what it’s worth, the path of least resistance from here is a bearish one.
- The ceiling in February was the 200-day moving average line, plotted in white on both stock charts. It didn’t cap the bullish moves in April, but the peak around $188 did step up again.
- On the other side of the daily bars is support at the gray 100-day moving average line, which has helped muster straight-line support around $174, plotted with a red, dashed line.
- It’s not evident on the daily chart, but when zooming out to the weekly chart it’s clear that at least some of this month’s weakness can be attributed to the falling resistance line that has guided RTN lower since last April’s peak.
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.