For a short while on Monday it looked as if traders were going to start the new week out in the same bullish mood they finished things last week. But, that wasn’t meant to be. By the time the closing bell rang, the S&P 500 had unwound an intraday gain to a loss of 0.45%.
Sorrento Therapeutics (NASDAQ:SRNE) led the charge lower, giving up more than 25% of its value yesterday after announcing it was selling new shares in an effort to raise $25 million worth of funding. But, it’s a small company, meaning it made a minimal net impact on the overall market. Rather, the market-wide weakness was broad and spread out, with decliners quietly outpacing advancers by a ratio of five-to-three. Selling volume outpaced buying volume by about the same proportion.
Still, though not as numerous, some of the few winners were big winners. Uber Technologies (NYSE:UBER) gained 2.4% following an upgrade from Citigroup, while Crowdstrike Holdings (NASDAQ:CRWD) jumped nearly 8% in response to a big upgrade from SunTrust.
As for names worth a closer look moving into Tuesday’s action though, it’s the stock charts of Bank of America (NYSE:BAC), Schlumberger (NYSE:SLB) and Fidelity National Information Services (NYSE:FIS) that have earned a closer look. Here’s what to look for.
It seems unlikely that any oil and gas name could lose more ground than most of them have already lost. If nothing else, crude prices have stabilized, seemingly unfazed by supply disruptions and/or gluts.
Yet, Schlumberger appears to be at risk. After a miserable 2018 followed by this year’s gyrations, SLB shares are once again knocking on the door of major technical support. One more slip-up could knock it over the edge of the cliff.
Click to EnlargeThat cliff is $30.98, where Schlumberger shares found a floor three times in August. It’s marked as a yellow dashed line on both stock charts.
- Notice that the gray 100-day moving average line quelled a rebound effort in July, and though it couldn’t do the same last month, the white 200-day line kickstarted a bearish reversal. Both are highlighted on the daily chart.
- It has been largely overlooked, but the volume behind the selloff since mid-September has not only been unusually high, but has been on the rise. The sellers seem to have tipped their hand.
Fidelity National Information Services (FIS)
The last time Fidelity National Information Services was on the trading radar back in late March, it had just dropped a handful of bullish hints. Namely, the purple 50-day moving average line had just moved back above the 200-day average, and FIS stock was finding continued support at other key moving averages.
That rally has since run its course. In fact, that rally’s underpinnings have since been shattered. Now Fidelity National Information Services shares are proving there’s resistance where the bulls don’t want to see it, and the last of a key support level is being tested.
Click to EnlargeThe rally’s ultimate floor connects all the key lows going back to December of last year, plotted as a light blue dashed line on both stock charts.
- Notice that right before FIS stock fell under that rising support level, it repeatedly met resistance at the purple 50-day moving average line (highlighted).
- We saw last week that the gray 100-day moving average line can act as a floor. The question is, will it do so if tested again this week? A move below that line, currently right below $129, could start a selling avalanche.
Bank of America (BAC)
With nothing more than just a quick glance, Bank of America shares are bouncing around in a trading range. And, perhaps there’s nothing more to the back and forth than that. Although yesterday’s failed effort to cross back above a couple of key moving averages is a technical concern, that could be chalked up to the fact that last month’s peak and rollover has yet to drag BAC stock back to the floor that connects all the key lows since March.
There’s more of a problem with yesterday’s action than it may seem with just a passing glance, however, The undertow was already leaning in a bearish direction, but moved decidedly in that direction thanks to yesterday’s modest loss.
Click to EnlargeThe big red flag is the so-called death cross, where the purple 50-day moving average line has fallen under the white 200-day average. This is a sign that the tide has already turned bearish.
- That possibility is bolstered by the fact that B of A shares have left behind a string of lower lows since March. For that matter, Bank of America shares have also made a string of higher lows.
- If the technical floor that lines up most of the major lows since the middle of last year, marked as a red dashed line on both stock charts fails to hold up as support, there’s a chance for s slide all the way back to near $22.
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.