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3 Big Stock Charts for Wednesday: Shopify Inc (US) (SHOP), FireEye Inc (FEYE) and Micron Technology, Inc. (MU)

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Stocks are running into a little resistance mid-week as the major indices have extended themselves near oversold territory and the S&P 500 is hitting what appears to be some round-numbered resistance around 2,500. In addition to lofty prices, investors are also sitting on their hands today as the Federal Open Market Committee decision may add some volatility to stocks in the afternoon and second half of the week's trading.

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On the options front, volume was below average as only about 15.3 million calls and 12.8 million puts crossed the tape. On the CBOE, the single-session equity put/call volume ratio rose to a two-week high of 0.69, with the 10-day moving average held at 0.64.

Today's Three Big Stock Charts will piggyback off the chance that the market is setting up for a rest by looking at Shopify Inc (US) (NYSE: SHOP ), FireEye Inc (NASDAQ: FEYE ) and Micron Technology, Inc. (NASDAQ: MU ). All three stocks are declining from technical overbought signals, suggesting that the sellers are in charge of the short-term directional moves for each.

Shopify Inc (SHOP)

After a short squeeze rally took Shopify stock from $105 to $124, the stock has finally run into some resistance in the form of an overbought signal that is likely to revers shares over the short term.

The stock has a chance of grabbing support at the round-numbered $120 level, but a break lower will increase selling volume.

  • As mentioned, traders who are holding Shopify shares should be tuned into the $120 price, as this is likely to try to hold. A break below $120 will see an increase in selling pressure and likely target as much as another 12% in decline.
  • The current momentum and RSI readings are similar to what we noted in May ahead of a 15% decline in shares.
  • Currently, technical support for the stock should make itself present as shares approach $105. This is also likely to be where we will see shares reach a short-term oversold reading from the RSI if volatility picks up, as it appears it will. Traders should identify this as a potential "buy the dip" price.

FireEye Inc (FEYE)

FireEye stock has been cruising to new highs after a post-earnings selling spree in July. The stock has climbed more than 27% from August lows to its recent highs, which put it into overbought territory. Now it appears that traders are taking their profits, forcing shares lower. Where will the buying opportunity present itself?

  • The current RSI reading remains high at 73, indicating that the last few days are likely to be the beginning of an intermediate-term pullback in FireEye stock.
  • The break below $17 that is occurring today will signal significant chart support being broken. This should increase the selling volume on FireEye shares over the next few weeks, fortifying the short-term bearish trend.
  • According to the charts, FireEye shares are likely to hit a round of technical buying when as they approach the $16 price point. This allows for another 6% decline from current prices.

Micron Technology, Inc. (MU)

Shares of Micron have been on an incredible tear since the beginning of August as a bevy of 13F filings showed increased position by private equity firms. The stock has rallied more than 33% over this time, taking Micron stock into an overbought situation. Shares have reversed over the last few days and have the potential to see a drop to $34.

  • Micron shares are heading into an earnings announcement next week. Earnings have drawn mixed reactions from traders over the last two years, which means that we are likely to see some "sell the rumor" activity ahead of the 9/26 report.
  • The RSI for Micron stock is sitting above 70 and now declining. This is normally indicative of a short-term top in a stock as the momentum changes hands from buyers to sellers. A move below $35.50 will likely increase the selling volume.
  • Our technical analysis of the chart targets a move to $34, where we will likely see traders come back as buyers before the earnings announcement. This would represent a 7% decline from the stock's highs.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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