All news was interpreted as good news on Tuesday, driving the S&P 500 0.68% higher. That was the second-highest close ever for the index, and positions the market for a run to another record despite what’s usually a bearish time of year.
Snap (NYSE:SNAP) set the pace, gaining nearly 5% during regular market hours and then another 8% in after-hours action in response to a big-time beat of its second-quarter revenue estimates. It was Yeti Holdings (NYSE:YETI) that logged the most noteworthy gain for the session though. Shares of the company that makes coolers and insulated cups jumped more than 12% after Cowen analysts upped their target price, explaining the company could drive “continued growth in the DTC channel without margin deterioration.”
Holding the market back, to the extent it could anyway, was PulteGroup (NYSE:PHM). The homebuilder’s stock fell more than 8%, despite topping its quarterly sales and earnings estimates, after posting a lackluster outlook for total sales volume in 2019.
As for the top trading prospects headed into today’s action, however, it’s the stock charts of KeyCorp (NYSE:KEY), CF Industries Holdings (NYSE:CF) and General Electric (NYSE:GE) that hold the most promise. Here’s a closer look.
General Electric (GE)
For months, General Electric shares have been hammering away at a rebound. None of the efforts ever took hold though, being up-ended before getting going in earnest. Analysts have been quick to quell those moves.
With Tuesday’s strong surge though, and with the right context behind it, GE stock is closer to a sustained breakout move than it has been in years. One more good day could get the stock over the hump for good. If that happens, the potential upside is significant given the several months’ worth of compression within a narrow trading range.
Click to EnlargeYesterday’s move has pushed General Electric above a frequent ceiling around $10.50, marked in yellow on both stock charts.
- Better still, Tuesday’s advance took shape with a push up and off of the 100-day moving average line plotted in gray. It also moved higher on strong volume, which has been the missing ingredient thus far.
- The next, and perhaps biggest, resistance from here is around $10.76, marked in red on the daily chart, where GE stock peaked a couple of times a month ago.
- If that ceiling is breached, the next most plausible ceiling is as high as $16.70, where the 38.2% Fibonacci retracement line awaits.
At the beginning of July, KeyCorp finally punched through a long-standing resistance line that made up the upper boundary of a long-standing wedge pattern. The same move also carried KEY stock above the critical 200-day moving average line, marked in white in both stock charts. The move didn’t last though. It hobbled on for a couple of days, but petered out in the middle of the month.
The effort was rekindled last week, but bolstered in a big way on Tuesday. In fact, though the surge from yesterday was a bit too strong to last without at least a slight cooling first, another key ceiling is now being chipped away.
Click to EnlargeThe ceiling in question is just under $18, marked in blue on the daily chart, where KEY stock has topped out several times since February. That was yesterday’s cap, more or less.
- Zooming out to the weekly chart puts the recent bullishness in perspective. It’s a break out a converging wedge pattern that started to take shape in late-2018.
- Although the bulls may want to regroup one more time and restart the well-founded recovery effort, it would happen in the shadow of a so-called “golden cross,” where the purple 50-day moving average has crossed back above the 200-day line.
CF Industries Holdings (CF)
Finally, CF Industries has been rallying well since its late-April low, forming a double-bottom near $39 that ultimately became the floor of a sideways trading range between $39 and $45.60. That range was snapped in June, and then re-snapped in an even more decisive fashion this month.
The end result is an overbought stock that’s fast-approaching a near-term resistance level. Nevertheless, if the advance can cool off without falling apart, the bigger-picture gain could last for some time.
Click to EnlargeThe near-term ceiling in question is currently at $48.98, plotted as a white dashed line, lining up the past two key peaks since April.
- As of Tuesday, CF Industries shares have the advantage of rallying after another golden cross. Even if the stock slides back to regroup, the fact that the 50-day line is above the 200-day average says the longer-term trend is bullish.
- The weekly chart largely explains how and why the range-bound action from earlier this year finally gave way to new bullishness. March’s as well as June’s low were made by a floor that extends back to late-2016 lows.
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.