The tug-of-war continues. The bulls won Wednesday’s contest, sending the S&P 500 higher. The action marks the seventh straight trading day stocks have logged a reversal of the prior day’s action though, and the market remains squarely between major support and resistance levels.
Advanced Micro Devices (NASDAQ:AMD) carried more than its fair share of the weight, advancing nearly 2% and followed closely by the 1.4% gain Bank of America (NYSE:BAC) shares logged. AMD wasn’t up for any particular reason other than it tends to move in the same direction as the market … just more so. BofA was up for largely the same reason, though a glimmer of hope in the interest rate front may have helped Wednesday’s move.
As for names worth a closer inspection headed into today’s action though, it’s the stock charts of Tiffany & Co. (NYSE:TIF), Regions Financial (NYSE:RF) and Arconic (NYSE:ARNC) that are of the most interest. Here’s why.
Regions Financial (RF)
With nothing more than a quick glance, Regions Financial shares just look like a choppy mess. The stock has been as low as $12.40 and as high as $17.90 within the past year, but at its current price of $14.10, it’s right where it was as of mid-December.
There has been a quiet method to the madness the whole time though. RF stock has been working its way toward a breakout move — probably a bullish one — and proverbially fueling the tank to make a prolonged move once it’s triggered. The trick is pulling the trigger.
Click to EnlargeIt has not been terribly well organized of late, but if you can back out to the weekly chart, the key lows since December of last year (including this month’s) have been prompted by a clear floor going back to 2016.
- Although not with perfection, the lows have been getting generally higher and the highs have been getting generally lower. This compression acts like a coiling spring.
- The trigger that will unleash the coil could be the combination of the stock’s move back above all the key moving average, and/or the purple 50-day average line’s cross back above the white 200-day moving average.
Commodities-driven stocks are tough to handicap. Not only are they subject to fluctuations in global economic strength, there are supply and demand fluctuations that make them perpetual moving targets. That’s doubly the case right now, given the ongoing tariff war between China and the United States, which has specifically put industrial metals into the middle of the political bickering.
The fact of the matter is, however, the shape of the Arconic chart suggests the specialty metals company is working its way into something fundamentally spectacular. It just needs one more good “oomph” to reach that tipping point.
Click to EnlargeThe make-or-break line in question is the line that connects the sequentially lower highs starting with the late-June peak. It’s marked as a red dash on both stock charts, and was being tested yesterday.
- It’s more evident in the weekly timeframe than the daily, but the bearish channel that worked against ARNC since 2015 has been snapped and replaced by a new rising support line plotted in blue on both stock charts.
- The likelihood of one last bullish thrust to get Arconic over its hump is high, given the amount of bullish volume that has taken shape just this week.
Tiffany & Co. (TIF)
Lastly, it needs a clear sign of follow-through, but yesterday’s action from Tiffany & Co. shares has thus far given some of the tell-tale signs of a reversal out of a downtrend and into an uptrend. How far any rebound effort might go is in question, to be sure, but given the context, TIF stick is most definitely a name to keep an eye on. Wednesday may have been a key capitulation.
Click to EnlargeChief among the signs of a capitulation are the major intraday swing from a terrible open to an impressive 3% gain by the close on a decidedly strong volume surge. These “outside days” that completely engulf the previous bar generally indicate a huge transition in sentiment.
- Bolstering the bullish case is the fact that the bounce is starting to take shape after the weekly chart’s RSI indicator reached an oversold condition. The last couple of times this happened, Tiffany roared.
- This week’s brush of a long-standing support line, plotted in yellow, also suggests there’s a strong pushoff point to utilize.
- The key, however, will be at least one or two days’ worth of follow-through. TIF stock, as solid as yesterday’s move was, still hasn’t crossed back above the 20-day moving average line plotted in blue.
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.