As we close to the top of what has been a reasonably stable Q3 for the fairness markets, we’re left with the everlasting query for traders: “What’s subsequent?”
We now have the Fed’s first price reduce within the rearview mirror, with a number of price cuts anticipated into early 2025. We even have a extremely contested election season, a quickly escalating state of affairs within the Center East, and earnings season, which is simply a pair weeks away.
The great thing about technical evaluation is that value motion ought to compensate for investor expectations for the entire above. If traders are excited, nervous, euphoric, despondent, or anyplace in between, the interaction between patrons and sellers can inform us an ideal deal about investor sentiment. With that in thoughts, listed below are among the particular person inventory charts I will be watching as we transition into the fourth quarter.
Comcast Corp. (CMCSA)
As I reviewed lots of of charts to ultimately settle in on simply ten to evaluation, I used to be struck by the truth that 5 out of the ten are in the identical sector: Communication Companies. From Magnificent 7 names to previous telecoms, there are many bettering charts on this sector.
Whereas many shares might be thought-about overextended after this week, Comcast is certainly not one of many them. This chart incorporates a traditional rotation from a distribution part (decrease highs and decrease lows) via a consolidation part (even highs and lows) and into a brand new accumulation part (greater highs and better lows).
This week, CMCSA lastly pushed again above its 200-day shifting common, in addition to the earlier peak from mid-July. If this inventory can observe via above the $42 stage, we might simply see a retest of the January 2024 peak round $46 and past.
Meta Platforms, Inc. (META)
One of many key questions for October is whether or not the market will stay sturdy regardless of the conventional seasonal weak spot round this time of yr. META could also be one of the best chart to observe to find out whether or not our benchmarks will stay in a bullish part.
Meta has examined resistance within the $520 to $540 vary since first arriving at these ranges in March, and, a pair weeks in the past, that stage was lastly eclipsed. Any time a inventory breaks above a well-established resistance stage, I need to see it maintain that breakout level on any subsequent pullbacks.
META ended the week in an overbought situation, with the RSI remaining above 70. This usually suggests a pullback is imminent, significantly when the RSI dips again under this overbought stage. Will Meta Platforms maintain $520 in addition to the 50-day shifting common on a pullback? If that’s the case, then this bull market might see uncommon power in arguably the weakest of the 12 months from a seasonal perspective.
VFCorp (VFC)
Subsequent is VFCorp, my first choice outdoors of the Communication Companies sector. This producer of attire and footwear manufacturers, together with Timberland and The North Face, has entered a brand new uptrend part off a significant low again in March.
Whereas VFC has already gained about 80% off the March low, the bullish part seems very a lot nonetheless in place right here. We are able to see a constant sample of upper highs and better lows, and the value is now trending greater above two upward-sloping shifting averages. The RSI indicator tells us the momentum is robust however not extreme. I have a tendency to think about charts like this as “harmless till confirmed responsible,” and, as a trend-follower, meaning I observe the development till the chart tells me to do in any other case!
Searching for the opposite seven charts to observe? Try the complete video on my YouTube channel!
RR#6,
Dave
P.S. Able to improve your funding course of? Try my free behavioral investing course!
David Keller, CMT
President and Chief Strategist
Sierra Alpha Analysis LLC
Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and methods ought to by no means be used with out first assessing your individual private and monetary state of affairs, or with out consulting a monetary skilled.
The creator doesn’t have a place in talked about securities on the time of publication. Any opinions expressed herein are solely these of the creator and don’t in any method symbolize the views or opinions of every other particular person or entity.
David Keller, CMT is President and Chief Strategist at Sierra Alpha Analysis LLC, the place he helps energetic traders make higher choices utilizing behavioral finance and technical evaluation. Dave is a CNBC Contributor, and he recaps market exercise and interviews main consultants on his “Market Misbehavior” YouTube channel. A former President of the CMT Affiliation, Dave can also be a member of the Technical Securities Analysts Affiliation San Francisco and the Worldwide Federation of Technical Analysts. He was previously a Managing Director of Analysis at Constancy Investments, the place he managed the famend Constancy Chart Room, and Chief Market Strategist at StockCharts, persevering with the work of legendary technical analyst John Murphy.
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