The decided bullishness seen during the two previous trading sessions didn’t persist through Friday. Rather, the modest 0.09% gain logged by the S&P 500 on the last trading day of last week suggests traders are still ultimately on the fence about the economy, worried August’s disappointing payroll growth figure could be an omen.
Advanced Micro Devices (NASDAQ:AMD) was a key culprit to that weakness, falling nearly 3% for no particular reason. Investors simply remain suspicious that it will be able to continue growing in the foreseeable future as it has in the recent past. Most trade turbulence with China could bolster the prospect of that headwind. Also holding the broad market back, albeit with less net impact than AMD, was Twilio (NYSE:TWLO). It tumbled 4.6%, as profit-takers dug in, worried this year’s big gains are being threatened by brewing weakness as well.
Meanwhile, Symantec (NASDAQ:SYMC) may have been the reason the S&P 500 mustered its small gain on Friday. Shares of the cybersecurity outfit rallied 4.5% after reports surfaced that a private equity firm was mulling an outright acquisition of the company.
As for the names most deserving of a look moving into the first trading day of the new week, however, take a look at the stock charts of Tractor Supply Company (NASDAQ:TSCO), WEC Energy Group (NYSE:WEC) and C.H. Robinson Worldwide (NASDAQ:CHRW). Here’s why.
WEC Energy Group (WEC)
Utility stocks have been especially strong this year, as investors seek out safety in anticipation of economic turbulence. It’s sound thinking, in fact, and WEC Energy Group was no stranger to that trend.
More so than most other utility names, however, WEC stock has raced too far, too fast. The speed and scope of the move carried shares well past the upper boundary of a long-established trading range. As of the end of last week, WEC Energy was starting to crack and break under the weight of those gains. It may be an omen of what’s to come.
Click to EnlargeThursday’s dip followed by Friday’s even-stronger dip is a red flag in and of itself, but the real problem is the amount of volume that showed up with that weakness. It says there are lots of sellers on the sidelines.
- Such a wave of weakness was inevitable. In June, WEC stock broke above a proven technical ceiling, marked as a light blue line on the weekly chart.
- As outrageous as it may seem right now, should the market fully recover and a “risk on” mentality becomes prevalent again, a slide all the way back to the trading range’s lower boundary (in yellow) becomes a possibility.
C.H. Robinson Worldwide (CHRW)
With just a passing glance at the stock charts of C.H. Robinson Worldwide, it would be easy to come to the conclusion that shares are stuck in consolidation mode. In fact, CHRW saw an increase in volatility in the June-through-August period, which has led the chart to develop a “diamond” (highlighted). This generally takes shape before a reversal.
If that’s the case — and the argument is good that it is — then traders may want to plan on new downside ahead. The diamond-shaped pattern, however, isn’t the only reason to suspect CHRW stock is poised to edge lower from here.
Click to EnlargeThe biggest red flag evident on both stock charts is the repeated failure since late July to move above the 200-day moving average line, marked in white.
- Although evident on the daily chart, it’s the weekly chart where traders can get a better view of the fact that C.H. Robinson shares are trending lower due to being confined within a falling converging wedge pattern.
- Should the prospective selloff take hold, the most plausible target is the convergence of both of the floors of the falling wedge pattern. They’re both right around $76, yet falling gently.
Tractor Supply Company (TSCO)
Shares of Tractor Supply Company have been impressively bullish since the middle of 2017, escaping the impact of a so-called retail apocalypse that has worked against most other names in the business. That’s likely because Tractor Supply is such an untraditional retailer. It has not been a straight-line move, but a bullish move nonetheless.
That bigger-picture effort, however, is now under more pressure than it has been at any point since the rally began. Although it has survived and snapped back from similar circumstances before, this time around there’s a significant difference.
Click to EnlargeThe make-or-break line is the red, dashed line marked on the weekly chart, connecting the key lows going back to the early 2018 low.
- Also in play is the 200-day moving average line marked in white on both stock charts. So far it has held up as a floor, much like it did late last year and in January. We only had to touch it two weeks ago to rebound.
- But, that rebound effort was short-lived. The 100-day moving average line plotted in gray on both stock charts has kept the rally from moving higher on two separate occasions in the past two weeks.
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.