Hope for a de-escalation of a trade war turned what would have otherwise been an off day into a sizeable win. On Tuesday, the S&P 500 finished up to the tune of 1.48%, pulling most stocks higher with it.
Apple (NASDAQ:AAPL) did a lot of the heavy lifting, though General Electric (NYSE:GE) wasn’t far behind. The iPhone maker advanced 4.2%, as it’s one of the key beneficiaries of a cooling tariff war. GE stock rose 3.5% for the same basic reason, though the CEO’s $2.8 million investment in shares of his company fanned the bullish flames.
Although few and far between, there were some losers. Advanced Micro Devices (NASDAQ:AMD) was one of them. Although it too benefits from eased trade tensions, traders are still struggling to tack on even more gains after this year’s big rally.
Headed into the midpoint of the week, it’s Seagate Technology (NASDAQ:STX), McKesson (NYSE:MCK) and O’Reilly Automotive (NASDAQ:ORLY) that merit a closer inspection as trading prospects. Here’s a detailed look at their stock charts.
With nothing more than a quick glance it would be easy to say McKesson is simply a volatile mess, and chalk up the bullishness seen since April to mere chance.
The move, however, is better organized and more meaningful than it may seem on the surface. Although certainly still choppy from one day to the next, MCK stock has crossed important lines, and found support at other lines that had to provide support in order to keep the rally in motion. Then there’s the kicker.
Click to EnlargeThanks to July’s strength, McKesson has cleared the short-term technical ceiling plotted in yellow on the daily chart, and also the weekly chart’s technical resistance that extends back to 2015’s peak.
- While still erratic, the daily volatility has been net-bullish. The purple 50-day average moved above the 200-day moving average line (marked in white on both stock charts) in June and never looked back.
- The bears attempted to up-end the advance last week, but the 50-day moving average turned into a floor to renew what has now become an entrenched advance.
O’Reilly Automotive (ORLY)
O’Reilly Automotive shares, unlike most other stocks at the time, ended last year on a bullish foot and continued on this year. It has more to do with the industry itself than ORLY in particular, as rival name Advance Auto Parts (NYSE:AAP) dished out comparable returns. But, the underlying reasons don’t change the effect.
In that same vein though, recent weakness from AAP is slowly becoming clear in ORLY as well. Although O’Reilly Automotive shares have not yet reached their topping point, they’re inching closer every day. One more bad day could do the trick.
Click to EnlargeThe tipping point, so to speak, as the support level that connects all the key lows going back to October, is plotted in yellow on both stock charts.
- Another key floor now under attack is the 200-day moving average line, marked in white on both stock charts. It’s being tested again this week, and that’s happening on a regular basis.
- Although not yet past the point of no return, notice that July’s high is below April’s. That’s the first lower high seen in some time. Also note the fact that the most recent bearish MACD cross occurred at a lower level.
Seagate Technology (STX)
March’s breakout effort from Seagate Technology ultimately failed. Although the move above the 200-day moving average line, plotted in white on both stock charts, was a bullish clue, the effort was halted at what has since become a well-established falling resistance line. It’s plotted in yellow on both stock charts.
The prospect of a recovery breakout has never really withered though. In fact, we’re closer now to one than we’ve been in a long while. That’s because a couple of key components to a full-blown bullish move weren’t in place then, but are now.
Click to EnlargeChief among those components is the fact that the purple 50-day moving average line is now above the white 200-day average. Moreover, both the 50-day and the 200-day average lines are sloped upward.
- It’s only evident on the weekly chart, but STX stock has been logging higher lows since its early 2016 low. Buying on the dips has proven to be a fruitful strategy.
- Although not seen here, shares of rival memory chip company Micron (NASDAQ:MU) are also performing well again, in step with a rebound in memory component prices. Herd-driven moves tend to last.
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.