The bulls did their best to bring the market back from the brink, but the follow-through on Monday’s modest strength ultimately failed. The S&P 500 ended the day down 0.14%, resting right on a pivotal support line.
The market might have fared better — even logged a winner — had it not been for Ford Motor (NYSE:F) and Snap (NYSE:SNAP). Ford fell 3.4% on Tuesday, though for no particular reason. Snapchat’s parent Snap saw its stock slide 6.4% in response to MoffettNathanson analyst Michael Nathanson’s comment that the company is quickly running out of money.” Not even the 12.4% gain from Zynga (NASDAQ:ZNGA) was enough to carry the broad market higher for the day.
None of those names merit any trading scrutiny as today’s action gets going though. Instead, stock charts of Kinder Morgan (NYSE:KMI), Fastenal Company (NASDAQ:FAST) and PG&E Corporation (NYSE:PCG) are your best bets. Here’s why, and what to look for.
Kinder Morgan (KMI)
Kinder Morgan should ring a bell. It was one of the names run through the analytical ringer a week ago, when KMI was toying with a breakout move above a major technical resistance level.
That didn’t happen right away, but with Tuesday’s advance, the ceiling has been broken. That should make it much easier to resume the uptrend that’s been materializing since April.
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• The $18.37 level is the big line in the sand. It had kept a lid on buying efforts through last week, but couldn’t keep the stock capped any longer.
• This breakout thrust is also well-founded. A week ago it was pointed out that Kinder Morgan was pushing up and off the 100-day moving average line, plotted in gray. Just within the past few days though, the purple 50-day moving average line has acted as a springboard.
• Notice that Tuesday’s surge also took shape on strong volume. There should be plenty of buyers waiting in the wings to pour in now that a key resistance level has been smashed.
Fastenal Company (FAST)
Fastenal Company is another name that should ring a bell. We took a closer look at it back on Sept. 10, fearful that a red-hot rally would end without warning as the stock bumped into a well-established resistance line.
That’s exactly how it happened. But, before FAST can continue sliding lower, it has to break below a couple of different potential support lines.
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• The ceiling in question was right around $61 … a line formed by connecting all the major peaks going back to early 2016. It’s plotted as a white, dashed line on both stock charts.
• The next-best support lines (and last bastions of hope) are the gray 100-day and white 200-day moving average lines, at $55.55 and $54.67, respectively. Neither has been particularly great support for Fastenal shares of late, but both have to be respected.
• If those last two potential floors fail, a trip back to the lower edge of the long-term trading range marked on the weekly chart is a distinct possibility.
PG&E Corporation (PCG)
Finally, back in mid-September we took a detailed look at shares of PG&E Corporation, noting they were getting close to breaking above a major technical ceiling.
It didn’t happen … at least not right away. And, even with the recent advance it’s still not over the hump. It’s once again close to clearing that hurdle, however, and this time it’s starting the effort with an even better head of steam.
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• The technical ceiling in question was and still is $48.81, plotted with a yellow dashed line on both stock charts. PCG has tested that level several times, but has yet to clear it.
• The proper underpinnings are in place, however. All the key moving average lines made bullish crossovers in August and September, suggesting this bullishness was building in multiple timeframes.
• This budding strength may have more to do with a growing preference for safer havens like utility stocks than it has to do with PG&E itself. If that dynamic changes, that may be enough to quell the rally.
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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