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It was a victory for stocks on Thursday, though not a decisive one. The 0.41% gain logged by the S&P 500 keeps it above some important technical support, but one rough day could still put the broad market into something of a tailspin.
Walt Disney (NYSE: DIS ) shares did more than their fair share of the heavy lifting, up 4.4% largely after Morgan Stanley predicted its planned streaming product, Disney+, would be even more successful than most investors have given it credit for . Restoration Hardware Holdings (NYSE: RH ), also just called RH, logged one of the biggest wins on Thursday though, rallying more than 15% after topping its fiscal first quarter estimates .
At the other end of the spectrum, Twitter (NYSE: TWTR ) fell 3.1% after MoffettNathanson analyst Michael Nathanson suggested the recent strength made it a good time to take some profits .
None make for great trading options headed into the weekend though. Rather, it's the stock charts of Nektar Therapeutics (NASDAQ: NKTR ), Vertex Pharmaceuticals (NASDAQ: VRTX ) and Symantec (NASDAQ: SYMC ) that present themselves as the top prospects. Here's why.
Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals is no stranger to big swings in both directions. In fact, big swings are the norm. These aren't just sizeable, trade-worthy movements though. They're actually pretty predictable in terms of size and scope. The turns are taking shape pretty much where they should, even if VRTX is incapable of moving anywhere in a straight line.
The stock's back at a well-established technical floor now, suggesting a rebound move is nigh. This revisit of a familiar floor does look a little bit different though, in that the stock's struggled to push up and off of it. It may be a clue that the bears are just waiting to deal a proverbial death blow.
Click to Enlarge • The range in question is plotted with white lines on both stock charts, tracing the major highs and lows going all the way back to 2017.
• Bolstering the case for a bounce here is the fact that the stochastic indicator is into oversold territory. That's not a condition that's been allowed to last long for Vertex Pharmaceuticals, but…
• …zooming out shows that VRTX has been hugging the floor in question since April. It should have rebounded by now. One or two rough days could break the support, perhaps unleashing a wave of pent-up selling.
Nektar Therapeutics (NKTR)
Nektar Therapeutics was beaten so badly last year that traders have been wary of stepping back into it now. But, to its credit, at least the bleeding has stopped. The few bulls still testing the waters have even established a technical floor since late last year.
There's a much bigger method to the madness though. That is, the selling has been slowly but surely ground to a halt, and the would-be buyers are establishing a base from which to carry the stock higher again. While there's still much work to be done, that work is being done.
Click to Enlarge • The floor in question is plotted in yellow on both stock charts, tagging all the key lows going back to late December.
• Zooming out to the weekly chart we can see shares of NKTR have already started to poke through falling resistance lines.
• The key to, and signal of, a fully established breakout thrust is the next move above the white 200-day moving average line at $40.86 and the weekly chart's Chaikin line moving back above the zero level.
In late March Symantec was featured as a name that had been range-bound for several weeks , and of the effort to push above a well-established ceiling at the time failed, a retreat back to the lower boundary of that range was likely.
SYMC did indeed punch through that ceiling, though it was a flawed break. With a gap left in the rearview mirror, shares started to peel back in May and eventually made their way back to the support portion of the range anyway. Since kissing that floor late last month though, the bulls appear to have regrouped and are ready to make the trip back to the ceiling again.
Click to Enlarge • The range in question is between $17.50 and $23.60, marked with red and yellow lines on both stock charts.
• The weekly chart also shows an oversold stochastic indicator, which more often than not does point where Symantec has moved to an unsustainable extreme.
• Curiously, though shares have yet to make a solid upward move, the weekly chart's rising Chaikin line suggests there's a lot more buying interest than selling pressure in place right now.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com , or follow him on Twitter , at @jbrumley.
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