Stocks managed to partially fight their way back from yesterday’s intraday plunge, largely spurred by a somewhat surprising commentary that accompanied the official rate-cut explanation. Still, the S&P 500’s 1.09% setback was neither modest, nor irrelevant. The index closed under its 20-day moving average line for the first time since early June.
Advanced Micro Devices (NASDAQ:AMD) did more than its fair share of the damage, losing more than 10% of its value after the company warned that its fourth quarter could prove “very difficult.” Qualcomm (NASDAQ:QCOM) wasn’t far behind though, losing more than 2% of its value during the regular session and falling more than 5% in after-hours action after reporting disappointing fiscal third-quarter revenue.
There were still some winners. Apple (NASDAQ:AAPL) was one of them, mustering a 2% gain in response to a quarterly report that could have been worse. Although iPhone sales fell, the company appears to be abating that slowdown.
Still, Apple can’t keep the broad market in the black on its own.
As for the top trading prospects moving into Thursday’s session, the stock charts of Mondelez International (NASDAQ:MDLZ), BB&T (NYSE:BBT) and Host Hotels and Resorts (NYSE:HST) are of the most interest. Here’s why.
Like most other banking and financial stocks, BB&T has pulled itself out of a funk it was stuck in late last year and early this year, and it has once again started to test the waters of a new uptrend. Unlike most other banking names, however, BBT stock has only just recently dropped some key technical hints that a new uptrend has been fully established. And even then, there’s one last hurdle to clear.
Click to EnlargeThe overreaching bullish hint in place is mid-July’s move above the resistance line that had been guiding it lower for months. That line is plotted in white on both stock charts.
- Underscoring the most recent leg of the rally, which has been unfurling on mostly bullish volume.
- Also underscoring the strength of the new rally effort is the cross of the purple 50-day line above the 200-day moving average, marked in white on both stock charts (highlighted on the daily chart).
- The last line in the sand is around $52, marked in yellow on both stock charts, where BB&T shares have peaked multiple times since late last year.
Host Hotels and Resorts (HST)
It was only a few months ago Host Hotels and Resorts looked like it was ready to rekindle last year’s bullishness. And, with interest rates falling in the midst of a still-healthy economy, real estate and REIT plays certainly had — and have — the wind at their back.
For a handful of nuanced reasons though, Host Hotels and Resorts shares are losing ground again. In fact, the shape of the chart made since the selloff began back in April has taken on a clear, and telling, shape. This week’s action almost serves as the nail in the coffin.
Click to EnlargeThe shape in question is a descending, converging wedge pattern plotted on the daily chart. This is funneling HST into what’s essentially a showdown between the bulls and the bears.
- Thus far, it’s the bears that appear to have an edge in the brewing standoff. The bearish volume surged on Monday and Wednesday, when the sellers were once again testing the support side of the wedge shape.
- Backing out to a weekly view doesn’t tell us anything we don’t know about Host Hotels and Resorts, but it does make clear that the undertow is decidedly bearish. There’s little that can stop the selling from here.
Mondelez International (MDLZ)
This year has been, as is the case for many food stocks, a great one for Mondelez International. Shares are still up 33% since the end of last year, even with yesterday’s sizeable stumble.
Wednesday’s 2.4% setback is nothing to shrug off though. It could mark the beginning of a more serious selloff that had until now been evaded. What happens the rest of this week will be critical in terms of making that call. But, whatever comes next, it’s the bulls that are on the defensive while the bears now have an edge.
Click to EnlargeThat “edge” comes in the form of yesterday’s move below the purple 50-day moving average. A couple of times since May it had served as support, but now it has failed to do so.
- Although yesterday’s selling-volume surge is a red flag, notice Wednesday wasn’t the first time we saw such action. A few times since May we’ve seen pullbacks on huge volume, hinting of a large number of would-be sellers.
- The weekly chart better illustrates just how overbought Mondelez has been since June, and how far back it could slide before finally finding a floor.
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.