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3 Big Stock Charts for Friday: Dominion Energy Inc (D), Dollar Tree, Inc. (DLTR) and Consolidated Edison, Inc. (ED)

Johnson Research Group

The market heads into the last day of the week on another weak note as investors continue to rotate out of sectors that are now settling into new bearish trends. We talked about three financial sector stocks yesterday as this groups is clearly leading the market lower. For what it’s worth, this sector took it on the chin yesterday as the Financial Select Sector SPDR Fund (NYSEARCA:XLF) finally cracked through its 200-day moving average. The financials are seeing some buying in the early trading, but this should be a dead cat bounce instead of a real tradable situation.

Today’s three big stock charts takes a look at a few companies that are still working in this volatile market. Companies like Dominion Energy Inc (NYSE:D), Dollar Tree, Inc. (NASDAQ:DLTR) and Consolidated Edison, Inc. (NYSE:ED) are among the stocks that are going against the grain during the seasonally weak September.

Dominion Energy Inc (D)

Dominion Energy Inc (D)

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Utility stocks are acting as a safe harbor for investors, as normal, but there’s another reason this sector is attracting cash flow. The Federal Reserve’s increasingly dovish tone has investors on the hunt for yield bearing stocks again, which puts the Utes right back on everyone’s screen. With a 3.85% yield and strong technical, Dominion is a stock that is attractive.

  • D stock has been trading with wild frequency through 2017, but the shares are now finishing a strong intermediate-term bullish trend. We’ve seen shares pull back over the last few weeks as they recoiled from an overbought signal but are now in a position for buyers to take advantage of the next rally.
  • The 50-day moving average for Dominion Energy stock is now trading in a bullish uptrend. This increases the odds that each trading day will result in a positive move. The last transition of this trendline was in late 2016 ahead of a significant rally in D stock.
  • Traders are watching the $78-level as this has served as chart support for Dominion stock. A rally from this price would continue a trend of higher highs and higher lows.  Something we’re not seeing in many areas of the market.

Dollar Tree, Inc. (DLTR)

Dollar Tree, Inc. (DLTR)

The retail sector has become one of the largest group of “pick ‘em” stocks as the sector is trading with one of the lowest correlations of the major market sectors. One of the winners in the group is the Comeback Kid, Dollar Tree.

Discount retailers are making a resurgence as back-to-school shopping and seasonality are providing a tailwind.

  • DLTR shares initiated a volatility rally after reporting better-than-expected earnings results a few weeks ago. The report also brought upgrades from Wall Street analysts that had been excessively bearish on the company.
  • Dollar Tree shares have rallied into an overbought situation as indicated by the stock’s current RSI reading, but in this case we expect shares to consolidate and then make another 5-10% rally higher.
  • Chart support is in place at $83 as DLTR shares have crossed above this historically sensitive chart price.
  • The recent move has taken shares of Dollar Tree back into a long-term bull market trend as they are trading back above their 20-month moving average. The stock’s last foray into this territory resulted in weakness; however, momentum and buying volume are now stronger, which indicates a stronger trend.

Consolidated Edison, Inc. (ED)

Consolidated Edison, Inc. (ED)

Consolidated Edison is trading higher for similar reasons as Dominion. The shares offer a 3.24% dividend yield and one of the stronger bullish trends among the Utility companies.

We’ve seen some weakness in the shares over the last ten days as the stock pulled back from highs, but chart support is offering the bulls a chance to get into this strong trend before the next rally.

  • The recent pullback in ED was mild and found chart support at $84. Noted in the chart above, this level served as resistance for the stock in June. Typically, a pattern that sees a stock trade back above resistance like this as strongly as Consolidated Edison has results in that resistance price transforming into strong support.
  • The recent pullback eased the overhead pressure from the technically overbought readings of the RSI for ED shares. This frees-up room overhead for the stock to punch through to new highs with a possible break above its volatility channel acting as the catalyst.
  • The Aroon indicator for Consolidated Edison continues to generate bullish readings as momentum remains strong. Our models are targeting a move to $95 and new highs.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.

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