Just one day after the S&P 500 made its best-ever close, investors changed their mind. Worried about new threats of economic turbulence, traders shaved 0.53% off Wednesday’s closing value for the index.
Ford Motor (NYSE:F) did the most net damage, losing more than 7% of its value in response to a lackluster second-quarter report, though shares of rival Tesla (NASDAQ:TSLA) took an even-bigger 14% tumble on the electric vehicle maker’s unexpectedly big loss.
Working to keep the S&P 500 in the black, unsuccessfully, were Nokia (NYSE:NOK) and Beyond Meat (NASDAQ:BYND). Shares of the telecom tech giant gained more than 10% on its second quarter numbers, while the meatless-hamburger outfit saw its stock advance almost as much during the regular-hours session on news that it was partnering with Dunkin Brands (NASDAQ:DNKN) to bring a new fast-food breakfast option to the market. Beyond Meat’s post-close gain of 3% pushed it past Nokia’s Thursday gain, though it had far less overall impact on the broad market.
None are great trading prospects as we head into the final trading day of the week. Rather, it’s the stock charts of Juniper Networks (NYSE:JNPR), Southwest Airlines (NYSE:LUV) and BorgWarner (NYSE:BWA) that appear best suited as potential movers.
BorgWarner shares may have taken a sizable loss on Thursday, pulling the rug out from underneath what looked to be a respectable turnaround effort that started to take shape early this year.
In some regards, however, Thursday’s stumble may have been the best thing possible for the young rebound attempt. Even before the closing bell rang, a handful of buyers were starting to wade back in. And, with or without the partial intraday comeback, we saw another bullish clue take shape. There’s just a little more work to do.
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• The assuring nuance in Thursday’s bar is where BWA found a floor and then started to rebound. All it took was a brush of the gray 100-day moving average line.
• Underscoring that bullish persistence is the “golden cross” that took shape yesterday, where the purple 50-day moving average line crosses back above the white 200-day moving average.
• The potential breakout catalyst has been well-defined. If BWA can push above the resistance line that’s tagged the major highs since April, plotted in blue on both stock charts, the bears may not bother with another attempt to drive it back.
Juniper Networks (JNPR)
Long-term Juniper Networks shareholders are no strangers to volatility. In fact, it would be unusual if JNPR stock wasn’t making wild and fairly unpredictable swings.
The bigger-picture tide is turning though, and for the worst. Though not readily evident on the daily chart, the weekly chart shows a long-established floor is starting to buckle. The daily chart in the meantime is starting to wave some other red flags of its own that underscore that mounting trouble.
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• Chief among the daily chart’s red flags is June’s and then July’s resistance at the white 200-day moving average line. Bolstering that bearish hint are several high-volume pullbacks since April.
• Juniper shares are currently above the lower edge of a converging wedge pattern, marked in blue, going back to 2013. But, that support has been cracked, by last month’s steep pullback. Another break under it us within reach.
• Though easy to overlook, the cross of the gray 100-day moving average line below the white 200-day moving average line in April happened at a level below the same warning that materialized in mid-2017.
Southwest Airlines (LUV)
Southwest Airlines shares didn’t start Thursday out on a particularly bullish foot. Last quarter’s earnings were better than expected, but the revenue shortfall and continued turbulence with the Boeing 737 MAX initially worried some investors.
When all was said and done though, LUV stock ended the day higher after traders had a chance to rethink what lies ahead. All it took was a kiss of a key moving average line to start forming an outside day. The big intraday shift in sentiment speaks volumes about the market’s view of the company, and the stock.
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• Yesterday’s close above Wednesday’s high following yesterday’s open below Wednesday’s low constitutes an “outside day.” The fact that the sellers couldn’t hold LUV shares down points to strong bullishness.
• The 200-day moving average line, plotted in white on both stock charts, sparked the intraday reversal. That’s the one line where such a reversal would mean the most.
• Zooming out to the weekly chart, we can see the underpinnings for this week’s bullishness were laid as far back as 2015, suggesting this new advance could persist indefinitely.
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.
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