It wasn’t a screaming bullish finish to the week, but it didn’t matter. The S&P 500’s 0.03% gain on Friday translated into a 1.1% advance for the five-day span. The close of 2,904.98 was the second-best close ever.
The market may not have even mustered that small gain had it not been for Advanced Micro Devices (NASDAQ:AMD). The hardware stock rallied 7.3% because … well, because traders love to love AMD. Weighing the market down more than most was the 15% plunge from Opko Health (NASDAQ:OPK). That setback was a follow-on from an even bigger setback a week earlier after CEO Phillip Frost was accused of being involved in a “pump and dump” scheme.
Neither are particularly compelling trading prospects here at the beginning of the new trading week. For today, stock charts of Oracle (NYSE:ORCL), Weyerhaeuser (NYSE:WY) and PG&E (NYSE:PCG) look like they’re holding the most opportunity. Here’s why.
Three months ago, Oracle was in real trouble. Already down sharply thanks to a March plunge, the feeble recovery effort was upended in June in a huge way. The stock plowed into new 52-week low territory.
That drubbing may have also been cathartic though … a capitulation. ORCL has snapped back in a big way, and clearing one more hurdle could unleash months of pent-up would-be buying. A major bullish technical cue materialized within the past few days.
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• That cue is called a golden cross, where the 50-day moving average line — plotted in pink — crosses above the white 200-day moving average line. That event generally means new momentum has fully developed.
• Take note of the way the bullish volume has started to grow again, just within the past few days. More and more people are showing increasing interest the higher this goes, rather than the opposite.
• The ceiling at $49.76, plotted with a yellow dashed line, is a big one. The past two efforts to clear it failed, but success on the third effort could be catalytic.
Between the slowing construction market and rising commodity prices, lumber outfit Weyerhaeuser is facing an uphill battle — and the stock is reflecting that. In fact, the stock’s toying with a break below a couple of different major support lines. One or two more bad days could hurl WY shares into a breakdown that might persist for a while.
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• On the daily chart, the make-or-break line is $33.96, plotted with a red, dashed line. That’s where Weyerhaeuser made lows for a little over a week. The bears continue to test that support.
• In the weekly timeframe, the line in question tags all the major lows going back to late 2016. Plotted with a dashed, white line, there’s nothing below it that well-positioned to easily stop any selloff.
• In this instance, this particular stock may be subject to headlines regarding the construction market, though that could be good or bad. Still, a break below either or both key technical floors leaves the lingering bulls with very little near-term hope.
Last but not least, if PG&E rings oddly familiar, that may be because its stock charts were dissected in late August. At the time, shares had just popped back above their 200-day moving average line for a second time, with the second instance being a decisive second-wind effort. Since then, a third-wind effort has unfurled, setting the stage for what could be (and should be) a prolonged move.
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• Notice how the 20-day moving average line, plotted in blue, acted as a floor earlier this month when the bears pushed back.
• The recent peaks near $48.80 could be a point of contention. Though that resistance might not necessarily quell the rally, it will be something to watch for. Conversely, if PG&E breaks above the $48.80 mark, there’s little left that stands in its way.
• This brewing strength may reflect a so-called “flight to safety.” If the perception becomes that safe havens like utilities are no longer necessary, possibly fueled by an end to the tariff war, that could put pressure on this sector-wide strength.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.
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