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The weight of all the recent gains once again proved to be overwhelming. After logging a gain that carried the index deeper into new-high territory on Wednesday, the S&P 500 fell to the tune of 0.44% on Thursday.
Advanced Micro Devices (NASDAQ: AMD ) did most of the damage, losing 1.2% of its value as its recent bullishness has invited some profit-taking against a backdrop of a weakening market. But Dollar Tree (NASDAQ: DLTR ) earns the dubious honor of being the day's most noteworthy loser. DLTR shares fell 15.5% on a second-quarter earnings miss that prompted the company to lower its full-year guidance.
There were some winners though. Insys Therapeutics (NASDAQ: INSY ) surged by 34% on news that its epinephrine nasal spray had been granted a "fast track" designation by the FDA .
Headed into the last trading day of the week - in front of a three-day holiday weekend - the stock charts of TE Connectivity (NYSE: TEL ), PulteGroup (NYSE: PHM ) and AmerisourceBergen (NYSE: ABC ) are setting up as your best trading bets. Here's what to watch.
TE Connectivity (TEL)
TE Connectivity isn't a household name. In fact, not only do most investors not realize it's an S&P 500 name, many people have never even heard of it. Yet, there it is … a $32 billion electronics behemoth that was one of 2016's and 2017's big winners.
This year, however, hasn't been a good one. In fact, it has been downright bad, and all indications are that it's going to get worse before it gets better.
Click to Enlarge • The daily chart's downtrend has been well framed by falling support and resistance lines (red, dashed) since the first quarter. The upper edge of that zone was bumped into earlier this month, but bolstered by the 100-day moving average line (gray), that move was doomed from the start.
• Since last week, we've not seen two major distribution days … high-volume selloffs. It's a sign that a lot of would-be sellers are waiting on the sidelines, and will act at the drop of a hat.
• It seems like an outrageous downside target, but given the scope and speed of the rally over the course of last year's fourth quarter, there's not a plausible technical floor again until the $77 area.
Thursday's 0.9% gain from AmerisourceBergen wasn't a game-changer … on the surface. But, a closer inspection of both the daily and its weekly stock charts indicates that the move did just enough to change everything for the better.
Click to Enlarge • The move finally got ABC over its 200-day moving average line (white) after the stock struggled when it was bumped for the better part of the past two weeks. That small advance also pushed AmerisourceBergen shares above a falling resistance line (blue, dashed) that tagged the major highs since March.
• Zooming out to a weekly chart of ABC, we can see that the new upward thrust is actually part of a long-term back-and-forth pattern that has been framed by clear support and resistance lines going back to the late-2016 low.
• The upper edge of the trading range is currently at $115. It could take a long while to reach that level, but it wouldn't be out of character.
The economy may be roaring, but the housing market's boom has all but evaporated. Inventory of homes for sale is rising and purchases are slowing. Ergo, starts and permits are falling. It's the right call, but it's still working against homemaker stocks.
PulteGroup is one of the names fighting a losing battle. In fact, the stock is on the brink of a more serious meltdown. And, the undertow is guiding things in that direction.
Click to Enlarge • The make-or-break line is right around $27.90, where PHM made lows several times since stabilizing in February.
• At the same time, PulteGroup is being sent lower by the boundaries of a falling, converging wedge patters (red, dashed). Sooner or later, that selloff from June's peak should drag PHM below $27.90.
• Zooming out to a weekly chart of PulteGroup we can put the matter in full perspective. The big runup last year left the stock vulnerable to profit-taking, and though the bulls drew a line in the sand early this year, they're still struggling to prevent the next leg of that profit-taking from taking shape.
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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