Archive for the ‘Chart of the Day’ Category

USL

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Under Armour Begins To Recover

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Shares of Under Armour have been under heavy pressure since early June.  At the late August lows the stock was down over 30% from the June peak.  As this month began UA began to perk up as a solid bottom took shape.  Today the stock is breaking above a key overhead trendline with the help of a top ten S&P 500 gain of 3.75%.  We believe Under Armour is set up well for a fresh rally leg that could recover most of the recent damage.

At the late July lows UA continued to hold key support near the $17.00 area.  This important support zone had already held the March and May lows but as August began the $17.00 area was clearly taken out.  UA drifted lower throughout the month but further damage was very limited.  By the end of last month it was becoming clear the downside action had reached exhaustion.  UA began September with a six day winning streak and by Monday shares were beginning to pierce heavy resistance near $16.00.  

Today’s impressive rally may prove to be the initial move of a powerful rebound.  UA still has a few hurdles to clear, number one being its declining 50 day moving average, but a solid base is taking shape.  Once shares have convincingly cleared the $17.50 area, which marks the  February, March, April, May and July lows, a major hurdle will have been taken out.  Until then we consider UA a low risk buy near current levels.  On the downside, a close back below $15.00 would send a clear warning sign that more basing is ahead before a new rally leg can take hold.

Also of note, UA sports a fairly high short interest ratio of 7.5.  This level of bearishness will provide extra upside fuel.

At time of publication we are long UA in a number of managed accounts.

F (Weekly)

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The S&P 500 Index Closes at New All Time Highs

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In addition, the S&P 500 Index extended its streak of monthly gains to five straight at the end of August.  An impressive run to say the least: 

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What happens next?  Well, its very good news for the bulls.  Since 1950, one year later the index is up 23 out of 24 times.  A pullback, even an extremely shallow one, has been too much to ask for and may continue to be. 

Hat tip Ryan Detrick

JPM

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Streak Update

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The S&P 500 Index has now gone 52 weeks without a 2% weekly lower close.  That’s the longest streak of this kind since 1995(61 weeks).  We live in interesting times. 

Hat tip Ryan Detrick

PFE

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Tesla Breaks Out

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Tesla, very quietly, lead the Nasdaq 100 on Monday with a 5.9% gain with the help of a nice jump in volume.  This breakout type move drove shares past a key overhead trendline that links the June and August highs.  The six week consolidation pattern that followed the stock’s last earnings report set the stage for a fresh rally leg.  The post earnings consolidation has ended today with an upside resolution. The new rally phase that follows could drive TSLA back up to its all time highs.

Back on August 3rd TSLA surged over 6.5% immediately following its second quarter earnings report.  This powerful move, its second best gain of the year, had very limited follow-through. TSLA began to consolidate after falling short of the July high and has been trading in a narrow range since.  Following today’s breakout the stock is well above this pattern leaving layers of support in place in the process. 

We believe Tesla is now set up for a return to its all time highs set back in late June.  The stock should be considered a buy on weakness.  A key support zone begins near $359.00, the stock’s high from last week.  An important hurdle will be the $370.00 area.  Once past the August high TSLA will have plenty of room to run.  On the downside, a close back below $340.00 would violate the September low sending a clear warning sign of trouble ahead. 

At the time of publishing we are long Tesla in some managed accounts.

 

INTC

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Illinois Tool Works

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We believe ITW(Illinois Tool Works)is set up well for a fresh rally leg.  The stock ended last week with a 1.4% gain on accelerating trade as it began to put some distance on what appears to be an important low.  ITW does have a few hurdles to clear but the technical set up is quite bullish.  We consider the stock a buy near current levels.

Six weeks after peaking near the $150.00 area ITW took a nasty post earnings hit.  The stock fell over 3.5% following a massive breakdown gap on July 24th.  This was ITW’s worst loss in over a year as selling pressure surged.  The stock continued to fade over the next four weeks before finally reaching what has proven to be a major support zone near $136.00.  This key zone is marked by the stock’s initial post election peak back in March as well as a powerful earnings inspired breakout gap back on April 24th.  ITW built a very solid base in this area while at the August lows.  If this base continues to hold we expect a rebound rally back up to the 2017 highs to develop.

In the near term ITW should be considered a low risk buy between $140.00 and $138.00.   On the downside a close back below $134.00 would violate the August lows as well as the 200 day moving average sending a clear warning sign.

Some other thoughts on ITW:

At the August lows the stock was deeply oversold as measured by the daily MACD(moving average convergence/divergence.   ITW has not been this oversold since January of 2016.

ITW sports a fairly high short interest ratio(4.7).  As shares rise off the current base this high level of bearishness will add upside fuel.

ITW is in the industrial/diversified machinery sector.  We believe many of the stocks in this sector will attract investor interest as rebuild/replace company’s in the wake of the extremely damaging storms in Texas and Florida.

We do not have a position in ITW at the time of this writing.

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