Despite the lackluster start to Monday’s action, the bulls staged a respectable recovery effort. By the time yesterday’s closing bell rang, however, those buyers were backing down. The S&P 500 essentially broke even in yesterday’s session.
Overstock.com (NASDAQ:OSTK) is arguably the reason stocks couldn’t log a gain on Monday. Although not a particularly large company, the particularly large loss of 25% it booked yesterday still proved to be dead weight. The announcement of a new CEO and his subsequent contraction of the company’s EBITDA guidance rattled investors. At the other end of the spectrum, Advanced Micro Devices (NASDAQ:AMD) rallied 2%. With considerably more decliners than advancers though, that move just wasn’t enough.
Headed into Tuesday’s session, it’s the stock charts of Gilead Sciences (NASDAQ:GILD), Jefferies Financial Group (NYSE:JEF) and Baker Hughes a GE Co. (NYSE:BHGE) that deserve a more detailed inspection. Here’s what’s most noteworthy.
Baker Hughes a GE Co. (BHGE)
All oil and gas stocks are tricky to trade, impacted not just by demand for fuel, but impacted by changes in supply as well. Throw on the political aspects of crude pricing, and anything goes.
Still, energy stock charts are subject to the same interpretations other charts are. That’s also true of Baker Hughes, and even at a time when its partial-parent company General Electric (NYSE:GE) is severing its relationship with the oil and gas player. It’s that event, in fact, that’s driving the finality of an event that has been taking shape for some time now.
Click to EnlargeThe falling resistance line that’s ultimately responsible for the weakness since the middle of last year, plotted as a blue dashed line on both stock charts, is under pressure again.
- Although that technical ceiling has been tested before, resulting in lower lows, since the low around $20.50 was made late last year that level appears to have become a more absolute floor.
- Simultaneously, Baker Hughes shares are once again testing the technical resistance of the 200-day moving average line, marked in white on both stock charts. The struggle to clear it is actually encouraging.
Gilead Sciences (GILD)
Gilead Sciences has been off and on our trading radar for months now. Just when it looks like it’s going to break out, it falters. But, just when it looks like it’s going to break down, it rebounds. The end results is a range-bound chart … a range that’s narrowing.
GILD stock, however, continues to inch closer to a breakout by virtue of (once again) testing the upper boundary of that narrowing trading range. Although still not over the hurdle, another test is coming this week. That test has something of a bullish edge.
- It’s subtle, but take note of the fact that the purple 50-day moving average line is close to crossing above the white 200-day moving average line after the two lines bearishly diverged last year.
- We’ve seen it before to no avail, but this time, the amount of bullish volume seems to be a little more solid than usual.
- The weekly chart is telling. A long-standing falling resistance line plotted in purple is bearing down on a couple of rising support levels, plotted in blue and yellow. With little room left to roam, support and resistance will soon force a move outside of the range that’s in play.
Jefferies Financial Group (JEF)
Contrary to the common assumption, a reversal of a stock chart isn’t necessarily a singular even. Sometimes it’s a process that can take shape over time, and requires several repeated efforts to shrug off the old trend and start a new one.
That may be what’s happening with Jefferies Financial Group shares right now. Last year’s bearishness hasn’t been perfectly and completely supplanted by new bullishness. But, the wide swings are now starting to force some higher highs and higher lows. It has also started to happen with decided support that bodes well from here.
Click to EnlargeIt’s difficult to see given all the volatility since late last year. But, the re-convergence of all the key moving average lines beginning last month ends last year’s bearish divergence.
- Yesterday’s action is also more meaningful than it may seem on the surface. The gain, which took shape on a tepid day for the market, was spurred by support at the white 200-day line and unfurled on huge volume.
- Zooming out to the weekly timeframe, much-needed help for the budding uptrend can be seen. Although not perfect, a rising support line marked in yellow has materialized, giving the bulls something to latch onto.
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.