The market ended last week like it started it … on the wrong foot. Thanks to Friday’s 0.53% slide, the S&P 500 took a loss of 1.0% for the five-day stretch. It was the second weekly loss in a row, jibing with a calendar that says this should be a rough patch for stocks.
Micron Technology (NASDAQ:MU) did more than its fair share of the damage, losing more than 11% of its value on 2020 guidance that fell short of expectations. That setback also proved to be a drag on other key tech names like Advanced Micro Devices (NASDAQ:AMD), which fell 2.5% on Friday.
At the other end of the spectrum, long-beleaguered bank Wells Fargo (NYSE:WFC) finally caught something of a break, jumping nearly 4% on news that its new CEO would be a well-qualified and well-respected Charles Scharf.
As for tickers that are going to be worth a closer trading look headed into today’s action though, take a look at the stock charts of Amazon (NASDAQ:AMZN), Broadcom (NASDAQ:AVGO) and Intercontinental Exchange (NYSE:ICE). Here’s why.
It has been caught up in the midst of political and trade warfare between China and the United States. But, the fact of the matter is, Broadcom and all of its tech peers has been doing just fine despite the tough headlines. The bears have quietly been chipping away, however, dragging AVGO stock to a make-or-break level that will either have to put up or shut up, so to speak.
Click to EnlargeAlthough problematic, last week’s tumble under the 200-day moving average plotted in white on both stock charts isn’t the chief concern. Most worrisome is the renewed test of the technical floor plotted in red on both stock charts that aligns all the key lows since July of last year.
- It has been a bit uneven, but the weekly chart’s volume bars indicate there has been a lot more selling interest than buying interest for weeks now. It has also ramped up over the past three weeks.
- It’s not always a problem, but in this instance, the fact that the purple 50-day moving average line is close to crossing under the white 200-day line is concerning, as the so-called “death cross” has signaled lower lows before.
It may be one of the market’s favorites, as well as one of the market’s best performers. But, that doesn’t mean Amazon.com is incapable of falling.
That’s especially true right now. Albeit sporadically, AMZN stock has slowly but surely been chipping away at some key technical floors. From here, as of Friday’s action, the onus is on the bulls to prove AMZN isn’t going to sink further. Perhaps worse, things are close to getting really, really bad.
- The big red flag here is the move under the 200-day moving average line plotted in white. We’ve seen it before to no avail, but this time it happened at the same time Amazon shares broke under the yellow technical floor that extends back to February.
- Should this selloff continue, the worst-case scenario is a trip back to the $1450-ish area where support that connects all the key lows since 2016 is found. It’s marked as a red dashed line.
- Bolstering the bearish argument is the amount of bearish volume that has started to materialize since May. On the weekly chart, the Chaikin line’s cross below zero is quantified evidence of that undertow.
Intercontinental Exchange (ICE)
With nothing more than a quick glance at Intercontinental Exchange shares, it would be easy to chalk up Friday’s setback to marketwide weakness. And, maybe that’s all it is.
But, the shape and context of that weakness is telling, and troubling. A bigger-picture look at the stock charts of ICE readily makes clear that momentum has been slowing, and for good reason. It would be surprising if Intercontinental Exchange wasn’t at the onset of a sizeable selloff, given all the clues falling into place.
Click to EnlargeThe shape of Friday’s bar is a red flag in and of itself. After opening above Thursday’s high, it fell to a close below Thursday’s low. This “outside day” reversal shows a sweeping change of heart, for the worst.
- Zooming out to the weekly chart, last month’s high aligns with several resistance lines that extend back as far as 2015. They’re all plotted in white.
- Even without the bump into a convergence of several technical ceilings though, the weekly chart makes clear that this year’s advance left ICE overbought and ripe for a pullback. That slide could be back to the low $70’s.
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.