When push came to shove as the weekend approached, it was the bulls doing all the shoving. The S&P 500 gained 0.85% on Friday, led by Advanced Micro Devices (NASDAQ:AMD) and General Electric (NYSE:GE). The former was up 5% because, well, traders love to love AMD, while the latter made its advance thanks to some kind wordsfrom market commentator Jim Cramer.
The market’s gains also materialized despite the initiation of new trade tariffs that were supposed to pull the rug out from underneath them.
As is always the case though, the best trading bets are names that steer clear of news-driven, emotionally charged volatility. To that end, Illinois Tool Works (NYSE:ITW), Comerica Incorporated (NYSE:CMA) and SCANA Corporation (NYSE:SCG) emerged as the best trading prospects to kick this new week off. Here’s a closer look at all three stock charts, and what to watch with each.
Comerica Incorporated (CMA)
With just a quick glance at its fundamentals, Comerica looks fine. And, with nothing more than a quick look at the chart, CMA doesn’t appear to be in any real trouble.
A closer, more scrutinizing look at the Comerica chart, however, reveals things have quietly gone from bad to worse. One more stumble could, and likely will, unleash a wave of pent-up selling.
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• Two weeks ago, CMA shares broke under a technical floor at $91.36, and proceeded to eventually test the 200-day moving average line as support on Friday.
• Though the recent lull looks to be something that just developed and not necessarily built to last, that’s not actually the case. On the monthly chart, the Chaikin line has been falling for a while, telling us there are a lot of traders looking to get out.
• It’s a long-shot downside target, but note that the $63 area is the only technical floor in view should the 200-day moving average line fail as a floor.
SCANA Corporation (SCG)
Utility company and power distributor SCANA was miserable performer in 2017. Though some of that weakness was deserved, the bears overshot. Now they’re starting to reverse some of that selling. The compelling feature of the chart, however, is the shape and pace of the turnaround.
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• The buy trigger here is the break above the 200-day moving average line. Just for the record though, the high for the past three days has been right around $40.75. That minor hurdle needs to be cleared before the thrust is perfectly solidified.
• To that end, and unlike so many other names that have recently crawled back above their 200-day moving average lines, SCANA shares are hammering out a slow, methodical, U-shaped reversal. That slow and measured pace allows for a more sustainable, eased move into breakout move.
• Notice that the bearish volume was waning on the way down during the first part of the year. With that first upswing in June though, the bullish volume poured out in spades.
Illinois Tool Works Inc. (ITW)
Last but not least, if Illinois Tool Works rings a bell, there may be a good reason — it was one of the trading suggesting put into the spotlight back on Monday of last week. Nothing’s really changed in the meantime, except for the fact that a key floor has been verified. Though ITW has yet to break below it, the fact that it at least temporarily stopped the downtrend speaks volumes.
Of course, if the stock ends up breaking under that support, the temporary support only makes a breakdown that much more damaging.
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• The floor in question is the 31.8% Fibonacci retracement line at $137.45. ITW shares bounced off of that support last week, but the bigger-picture downtrend is still in place.
• That downtrend is being framed by a falling trading channel that extends back to early this year. The stock’s still closer to the upper edge of that range than the lower one, leaving plenty of room for more downside movement.
• Note that Friday’s bearish action not only unfurled on a day when the rest of the market was decidedly bullish, but that selloff took shape on unusually high volume.
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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