The bulls were decidedly back in charge on Wednesday, pushing the S&P 500 up to the tune of 0.72%. The advance goes against the odds, but hopes for progress on the trade war front are giving rise to investing optimism.
Blue chips like AT&T (NYSE:T) and General Electric (NYSE:GE) led the charge. The telco rallied 3%, with investors increasingly loving the prospect that new activist shareholder Elliott Management will be able to impose change for the better. GE shares, meanwhile, advanced 2.4% in response to news that it would be raising $3 billion by selling its Baker Hughes (NYSE:BHGE) division and using the proceeds to pay down debt.
Holding the market back more than most names was Square (NYSE:SQ), down 2.8%, renewing a selloff that got rolling early last month. The close of $59.20 was the lowest close since January.
As for names worth a closer inspection on Thursday though, take a look at the stock charts of Regions Financial (NYSE:RF), Conagra Brands (NYSE:CAG) and Paypal Holdings (NASDAQ:PYPL). They’re each moving into a curious technical situation.
Paypal Holdings (PYPL)
July was a tough month for most stocks, and PayPal Holdings was no exception to that weakness. The stock seemingly started to bounce back in August though, hinting at a renewal of an incredible rally effort that took shape early on in the year.
That rebound effort was wholeheartedly up-ended last week though, right where one would have expected a pushback to take shape. Now PYPL stock is hanging by a thread, pressuring its last support level anywhere nearby on the horizon.
Click to EnlargeThe support line in question is the 200-day moving average line, plotted in white on both stock charts. However, it’s become clear there’s something about the $102.23 level as well, marked in yellow.
- The prod for the renewed weakness was a bump into the purple 50-day and ray 100-day moving average line, the former of which has since fallen below the latter (highlighted).
- If the current technical floors fail to keep PayPal shares propped up, the next most likely line in the sand is the line that connects the key lows from 2018, marked as a dashed blue line on the weekly chart.
Conagra Brands (CAG)
The final quarter of last year was a tough one for most stocks, but it was downright miserable for Conagra Brands and its shareholders. Shares of the food company fell by roughly half their value in just a matter of weeks.
That steep selloff may have ultimately served as a capitulation though, at a time when the company (along with the food industry as a whole) found its bearings again. The action since then suggests that at the very least stability is in the cards, and one more good day could put a full-blown rally into motion.
Click to EnlargeThe compelling clue here is the converging wedge pattern that’s taken shape since early this year, framed by red and blue dashed lines on both stock charts. CAG stock is now above that upper boundary.
- Another apparent resistance line has formed in the meantime, however. Horizontal resistance around $30.15 appears to be in play, plotted in yellow on both stock charts.
- Although not overwhelmingly so, the volume behind the past four days of bullishness has been better than the recent average. It’s a sign there may be buyers waiting in the wings, ready to pile in.
Regions Financial (RF)
Finally, in step with most other bank stocks, Regions Financial shares have soared over the course of the past three weeks. A rebound in interest rates prodded the bulk of the bounceback.
This sort of thrust is enticing, suggesting a huge bullish motion is underway. And, maybe that’s how this one will pan out. It’s worth noting, however, that we’ve seen this sort of effort peter out before, right as it bumped into a technical ceiling that has been encountered just within the past few weeks.
Click to EnlargeThe technical line in question is the connector of all the key highs since April, marked as a white dashed line on both stock charts.
- Although overheated and too aggressive, the fact that the purple 50-day moving average line is close to crossing back above the white 200-day moving average line is meaningful. That’s a strong buy sign.
- Underscoring the move that has taken shape so far is very solid volume behind the buying, though the sheer pace of the move still leaves Regions Financial vulnerable to profit-taking.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley.