Sometimes its amazing how the market can change over a weekend, which is one of the reasons that we often hold off on adding new positions on Friday afternoons. This weekend’s news cycle focused heavily on the tax reform bill pressing through Congress resulting in this morning’s strong reversal of Friday’s selling spree.
Over the short-term, we expect the news to carry stocks higher except for some of the technology sectors. Today’s Three Big Stock Charts looks at Bank of America Corp (NYSE:BAC), Bristol-Myers Squibb Co (NYSE:BMY) and Advance Auto Parts, Inc. (NYSE:AAP). All three of the companies are breking into volatility rallies that should carry them higher into the New Year.
Bank of America Corp (BAC)
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The combination of higher rates and strong economic activity has the larger banks in rally mode.
Bank of America shares are flashing signs that the intermediate-term trend is ready to carry shares higher as the stock heads into the seasonally strong year-end trade.
Shares of Bank of America bounced from their 50-day moving average twice in as many weeks, showing the strength of this trendline. This 50-day is also trending higher, indicating a strong intermediate-term bullish trend. Last week, the stock broke above its top Bollinger Band, which acts as the catalyst for a volatility rally. Shares are now back above this threshold, which will continue to draw fast buying to the shares. Shares are moving into overbought territory as the RSI reaches above readings of 70. This could put some selling pressure on the stock, but the intermediate-term trend is more likely to maintain the bullish trajectory.
Bristol-Myers Squibb Co (BMY)
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Technology and pharmaceutical stocks have been lagging the market of late, but there are some stocks within those group that are presenting themselves as opportunities — like Bristol-Myers Squibb. After spending some time consolidating, the shares are ready to move higher with the market.
Shares just crossed back above their 50-day moving average over the last week of trading as Bristol-Myers Squibb shares are gaining technical traction. We should see the trend of the 50-day turn bullish as it transitions into an ascending pattern. The Chande Trend Meter just moved into bullish signal territory last week as the readings broke above 70. This indicates that the stock is beginning to gain positive momentum as its trend improves. Like a number of other companies, Bristol-Myers Squibb shares broke above their top Bollinger Band over the last week and are resuming this activity today. This suggests that a volatility rally is preparing to carry shares higher on increased volume. Advance Auto Parts, Inc. (AAP)
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After seeing the “sell the news” crowd bring Advance Auto Parts shares lower after their positive earnings results, the stock has regained its technical composure as it moves into a bullish rally. The dip provided by the post-earnings selling gave traders a great opportunity to get in to shares ahead of what is likely to be a strong year-end run.
The break above $100 represents a break of the chart resistance that was in place at this price because of past tops/bottoms and the round-numbered aspect of the price level. The Chande Trend Meter has also moved into bullish territoey on Advance Auto Parts as the trend is now improving while moving through key resistance levels. This will attract more bullish buyers into the market. Advance Auto Parts shares have roughly 12 percent of overhead room to run higher before running into resistance from the stock’s 200-day moving average. A Break above the top Bollinger Band will make quick work of this rally as the bulls pile back into this popular stock.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.