The market mustered a gain on Friday, but it was a squeaker. The S&P 500 spent the better part of the day in the red, after spending all of Thursday in the red. And, had it not been for Lululemon Athletica (NASDAQ:LULU), the market may not have even been able to do that. LULU shares gained more than 13% on an unexpectedly strong second quarter report.
At the other end of the spectrum, Ford (NYSE:F) fell 2.3%, while software outfit Zuora (NYSE:ZUO) saw its stock plummet nearly 19%. The carmaker’s setback came in response to news that newly imposed tariffs would prevent it from importing one of the vehicles it makes in China and selling it in the United States. Zuora, meanwhile, tanked on a rather disappointing second-quarter report.
None of those names are well-suited for trading as the new (and shortened) trading week begins. Headed into Tuesday, traders will want to keep a close eye on the stock charts of Schlumberger (NYSE:SLB), Fortune Brands Home & Security (NYSE:FBHS) and Laboratory Corp. of America (NYSE:LH). These three names offer the most reliable chart patterns here in an uncertain environment.
In looking at nothing more than the last few days of trading for Laboratory Corp. of America, it would be easy to come to a bearish conclusion. Yes, the stock managed to rebound a little on Friday, but there still seems to be an undertow, with the stock peeling back from its mid-June peak.
When you take a step back and look at what’s happened each of the last several times LH shares have encountered the 200-day moving average line, though, and you have to at least acknowledge that a bigger rebound may already be underway.
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• The action at the 200-day moving average line (white) is clear on the weekly chart. Each instance it’s been brushed since May of last year, that kiss has ended up fueling a move to even higher highs,
• Just as reliably as the 200-day line has acted as a floor, all the major peaks for over a year now have materialized at a well-defined resistance line (red, dashed). That ceiling will be roughly at $190 by the time it could be tested.
• If the 200-day moving average line fails to hold up as a floor though, there’s little that will be able to stop the bleeding soon, or easily.
With just a quick glance at the chart of Fortune Brands Home & Security shares, it appears the stock is at least trying to gear up for a bounce. And, maybe that’s exactly how things will shake out.
Would-be buyers or current owners may not want to count their chickens before they’re hatched though. FBHS stock wasn’t “just a little off” last week. That lull has dragged Fortune Brands Home & Security dangerously close to a major support level, and more than a few bears showed their true colors.