Last week’s bullishness continues to fade away, with the S&P 500 ending yesterday’s action up a nearly immeasurable 0.03%. And, that gain only took shape in the last few minutes of the day’s trading action.
Disney (NYSE:DIS) and Netflix (NASDAQ:NFLX) were the proverbial problem children, albeit for understandable reasons. The former fell while the latter was off by after Apple (NASDAQ:AAPL) unveiled its competing streaming service. Priced at only $4.99 per month, even offering less content than its rivals, the iPhone maker has tacitly declared something of a price war.
To that end, AAPL shares gained more than 1% in response to its announcement.
That gain was chump-change compared to the 2.5% advance Bank of America (NYSE:BAC) shares logged today. BofA leads a group of bank stocks higher, in step with recovering interest rates.
Headed into hump-day, however, it’s the stock charts of JPMorgan Chase (NYSE:JPM), Fastenal Company (NASDAQ:FAST) and Micron Technology (NASDAQ:MU) that have earned a closer look. Here’s why, and what may lie ahead for each.
Micron Technology (MU)
Just a few months ago, Micron Technology was presumed to be in serious peril. Yet another memory chip glut had lowered prices, punishing manufacturers who dared to ramp up production to meet what was perceived to be sustainable demand.
This year has been dramatically different though. Not only is MU stock up, it has moved higher in a way that has set the stage for an explosive move higher from here. It will need some help to do so, and the effort may not be long-lived. The potential is tremendous though.
Click to EnlargeThe key clue here is the upside-down head and shoulder pattern. The neckline is marked in yellow on both stock charts. The theory goes, once the neckline fails as resistance, MU stock can rally nicely.
- Micron shares are moving into the opportunity well-positioned too. The purple 50-day moving average line recently crossed above the white 200-day moving average line, and MU shares found support at the 50-day line a couple of weeks back.
- While the basic shape of the chart is right, there are some flaws. Namely, a handful of bullish gaps were left behind since early last week, now begging to be closed sooner or later.
JPMorgan Chase (JPM)
Micron Technology isn’t the only name on the verge of benefiting from what appears to be an upside-down head and shoulders pattern, however. JPMorgan Chase is as well. Although it’s not as well-formed as Micron’s and has moved a little more erratically as it has unfurled, the prospective upside is still noteworthy.
In fact, JPM stock is arguably better positioned to make a nice run given a hint offered up on the long-term weekly chart.
Click to EnlargeAs is the case with MU stock, the neckline of the JPMorgan head-and-shoulders setup is plotted in yellow on both stock charts. It extends all the way back to the early-2018 peak.
- Simultaneously, the string of higher lows seen since December of last year is actually an extension of a support line that started to materializing in 2016. It’s marked as a red dashed line on the weekly timeframe.
- If the head-and-shoulders setup pans out, the move could carry JPMorgan Chase as high as $142. That 25-point move between here and there is roughly the same distance between the neckline and the low of the ‘head.’
Fastenal Company (FAST)
Finally, the last time we looked at Fastenal Company shares back on July 22, the stock was fighting a losing battle. Its 50-day moving average line capped a rally attempt, and sent shares lower to test a major support line around $30. The bulls tried to push back, but by early August that last-ditch floor was broken.
The sheer scope and speed of the selloff, however, didn’t let FAST stock move all the way back to a long-established floor where it would be able to make a reversal. The rebound started to take shape just a few days later, and is sending the stock soaring to a new paradigm now.
Click to EnlargeThe old trading range framed by yellow lines appears to have been reframed. The new floor and ceiling, though far from cemented, are marked in red dashed lines.
- But, if the previous technical ceiling is still in play, FAST stock is just under it right now. This would be a good place for the sellers to take a stand, or at least take profits.
- What’s missing with the rebound effort thus far is meaningful volume behind the move. That might take shape if Fastenal is pressured lower, but survives the weakness.
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.