Monday’s dead-cat bounce wasn’t meant to last. Instead, with recession worries renewed by another inversion of the two-year and ten-year yield curve, the S&P 500 fell 0.32% on Tuesday.
Altria Group (NYSE:) led the charge, falling another 4% as investors protested its reported plans to merge with rival Philip Morris (NYSE:). To that end, Philip Morris shares fell nearly 8%, albeit on lower volume, on the unpopularity of the idea among its shareholders.
Yet, there were some winners. Costco (NASDAQ:) was one of them, up 5% after a very well-received opening of its first store in China.
As for names worth a look headed into the midpoint of the trading week though, take a look at the stock charts of eBay (NASDAQ:), UnitedHealth Group (NYSE:) and Berkshire Hathaway (NYSE:, NYSE:BRK.B). Here’s what’s most noteworthy.
UnitedHealth Group (UNH)
It has more to do with the broad market and the industry itself than it does with the company. Nevertheless, UnitedHealth Group shares — already fighting a losing battle — started to break down in a big way last week. Yesterday’s 3.1% tumble underscored how easily UNH stock could be up-ended.
While the stage is perhaps set for a short-term dead cat bounce, even a modest recovery effort wouldn’t be enough to undo the bulk of the damage that has been done just since the middle of last month.
- Also note that the convergence of all the key moving average lines in February and March has since turned into a divergence … a bearish one. The blue 20-day and purple 50-day moving average lines have since turned into technical resistance as well (highlighted).
In the middle of last month, eBay was . After it punched through a technical ceiling just under $39 in June, a couple of very rough days were testing that level again as resistance.
It ended up surviving, against the odds. But, that reprieve may have only been temporary. The bears took another shot early this month, and although EBAY stock bounced off the former ceiling near $39, the bears started to take another shot on Friday. The outlook is not encouraging for a couple of different reasons.
- It’s only a mild concern at this point, but notice how the “down” volume bars since the middle of last week are starting to grow taller, and taller than the green “up” volume bars.
Berkshire Hathaway (BRK.B)
Finally, it’s not a name that’s often analyzed from a charting or technical perspective. But, if Berkshire Hathaway is dropping technical hints, then it’s dropping technical hints.
And, that is what it’s doing here. Although they’re unsurprisingly subtle given the income-oriented nature of Buffett’s portfolio, they’re there, and they mean something. Indeed, given that Berkshire is a name preferred by the non-trader types, there’s an argument to be made that the chart’s shape tells us more about the changing viewpoint of the average investor than charts of more actively traded names. In this case, a big red flag is starting to wave.
- It would be easy to miss in the entanglement, but all four key moving average lines are now sloped downward. It’s a subtle clue that the momentum has taken a turn for the worst in all timeframes.
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, , or follow him on Twitter, at @jbrumley.
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