The rebound that was nowhere to be found on Wednesday made up for lost time on Thursday. With the S&P 500’s 1.88% advance, the index is back above the key 50-day moving average line. Missing was an overwhelming level of volume, and any other convincing proof the move can persist.
Leading the charge were Advanced Micro Devices (NASDAQ:AMD) and Roku (NASDAQ:ROKU). Shares of the chip maker were up nearly 16% following the unveiling of a new data center server chip that Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Twitter (NYSE:TWTR) have both already incorporated into their development plans. Roku jumped 20% in response to yesterday’s earnings release, which showed revenue well ahead of expectations. User growth was tremendous too, now standing at 30.5 million regular viewers.
Not all names were up in yesterday’s big advance. Fox (NASDAQ:FOXA, NASDAQ:FOX) fell more than 5% after starting the day higher in response to last quarter’s numbers. Traders quickly decided they weren’t thrilled about the decision to acquire a couple of outfits that don’t necessarily fit with the company’s current model.
As for names that are worth exploring as trading prospects headed into Friday’s session, however, it’s the stock charts of Monster Beverage (NASDAQ:MNST), General Motors (NYSE:GM) and Kimco Realty (NYSE:KIM) that are most worth exploring.
Monster Beverage (MNST)
The knee-jerk reaction to the quarterly report Monster Beverage posted after Wednesday’s close was bearish. Sales as well as earnings missed analyst estimates, and MNST stock started to dish out another major setback that investors have grown accustomed to of late.
As investors had time to digest the numbers though, with a little technical help, Monster Beverage was able to reverse course in a big way and end the session pretty deep in the black. The sheer scope and context of the one-day move speaks volumes about what lies ahead.
Click to EnlargeThursday was a huge “outside day,” where the open and close completely engulf the previous bar’s high-to-low range. That turnaround and the volume behind it suggest a lot of bulls were, and perhaps are, waiting in the wings.
- Backing out to the weekly chart gives us some idea of how and why the stock stopped falling and started rallying where it did. All it took was a kiss of one of the support levels that extend back to 2017.
- Even without that support line kicking in though, the intraday cross back above the white 200-day moving average line and the gray 100-day moving average line are solid buy signals in and of themselves.
General Motors (GM)
In mid-July, General Motors was highlighted after it staged another attack on a falling resistance line. Although not yet over it at the time, a string of higher lows leading up to that test was telling. The bigger trend was also bullish, for those investors able to stomach the volatility GM stock has been dishing out for years.
GM shares did end up punching through both levels of closely aligned resistance, only to peak and then crash again the very first day of this month. This week though, GM stock is back above that technical ceiling. This second effort may well be the one that sticks.
Click to EnlargeAlthough plotted on the daily chart, it’s the weekly chart that better illustrates how General Motors shares have been guided downward by a falling ceiling that’s made for lower highs.
- It ended up meaning nothing in February, but as of yesterday, the purple 50-day average is above the gray 100-day line, which is above the white 200-day moving average. All three are sloped higher now as well.
- Although the undertow is bullish, the volume behind the past couple of day’s bullishness has been alarmingly tepid.
Kimco Realty (KIM)
Between the middle of 2016 and the middle of 2018, Kimco Realty shares were beaten down, rather severely, in anticipation of trouble that never really took shape.
The stock has since started a recovery effort that has actually been quite impressive, with KIM stock bumping into new 52-week highs earlier this month and mostly shrugging off the marketwide weakness other stocks have seen of late. It’s the shape of this move since early this year, in fact, that’s so interesting. It’s either going to be very good, or very bad.
Click to EnlargeIt’s more evident on the weekly chart than the daily chart, but Kimco has been getting squeezed into a converging wedge pattern since early last year, framed by purple and white dashed lines on both stock charts.
- Although the trend within that rising wedge pattern is bullish, such a rise can often be a setup for a surprisingly large wave of profit-taking.
- Even so, most of the clues evident thus far point to an eventual bullish break above the wedge’s upper boundary, currently near $19.50. Chief among them is this week’s push up and off of the purple 50-day moving average.
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.