An impressive April jobs reports drove a big bullish end to last week, but it’s possible the market was ripe for a rally anyway. When all was said and done, the S&P 500 ended the day up 0.96%, closing just shy of its record-best close made on Tuesday.
Amazon (NASDAQ:AMZN) did more heavy lifting than another stock. Shares of the e-commerce giant were up more than 3% following news that Warren Buffet’s Berkshire Hathaway began building a position in AMZN during the first quarter. Smaller United States Steel (NYSE:X) actually logged the much bigger gain, however, gaining 17.1% in response to what can only be characterized as an incredible first quarter.
Although few and far between, there were some losers. Cognizant Technology Solutions (NASDAQ:CTSH) was one of them, falling more than 11% after falling short of last quarter’s earnings estimates and then offering lackluster guidance.
With nothing more than a quick glance, Mylan looks like it’s still stuck in the same downtrend it has been stuck in since March 2018. And, maybe that’s the case. Since December, however, MYL stock hasn’t made a lower low. That may be a hint that, at the very least, the bulls are trying to set up a recovery move. They’re doing so with the wind at their back.
- Mylan has now made a triple-bottom, using the $26 level as the technical floor. That line is plotted in red on both stock charts.
- The volume behind the past couple of bullish swings had been decidedly bullish, leading to last week’s Chaikin line cross back above zero.
- The path ahead for the bulls isn’t an easy one. Not only are there two separate straight-line ceilings, plotted in blue and yellow on both stock charts, but each of those potential resistance levels is also bolstered by a nearby moving average line.
American Airlines Group (AAL)
The last time we looked at American Airlines on April 11, it was only toying with the idea of a break above an established resistance line. Since then, it has happened. It was ugly and erratic, and far from convincing, but it happened.
Last week’s renewal of that effort could be longer-lived though, and finish the job of getting the recovery effort going in earnest. The make-or-break line is not only close, but a familiar one that could prove inspirational to would-be buyers.
- The first part of the rebound effort was and still is a move above the falling resistance line that tags all the key peaks since September. That ceiling is plotted with a yellow dashed line on both stock charts.
- While the straight-line resistance has been cleared, the big 200-day moving average line plotted in white on both stock charts has not yet been hurdled. The bulls keep getting closer though.
- Setting the stage for the second (and maybe third or fourth) breakout effort is a triple bottom around $30, plotted in red on both stock charts.
- The volume behind the bullish thrusts hasn’t been impressive, but it may improve if and when the 200-day moving average line is cleared.
Finally, in normal circumstances, chart gaps are a problem. The market doesn’t like to leave them unfilled, and will seemingly make a point of reversing a perfectly good trend to close them up.
Celgene shares could wind up being an exception to that, however, particularly after Friday’s impressive run that for a while didn’t look like it was going to happen. (On the other hand, it’s possible Friday’s surge was the final head-fake CELG stock needs to offer before lowering the boom in unsuspecting buyers.)
- The compelling clue here is last week’s push above $95.50, plotted with a yellow dashed line on both stock charts. The stock topped there in September and early April, but finally broke through on Friday.
- Despite the gaps, note that the progressive rallies since February both pushed up and off moving average lines. That underscored the bullish thesis.
- The weekly chart puts things in perspective. Although technical overbought since January’s pop, there’s still a huge piece of last year’s loss to reclaim.
- Still, there’s a decent-sized gap from late March and a huge one from January that could already be beckoning the stock back. Any rally could be readily pressured.
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.