I'm trying to steer away from energy and material shorts this morning. Many of the stocks have reversed off their lows and several of the most beaten-down names have even seen green within the first 40 minutes of trading.
Instead, I'll focus on some different sectors. While I've liked several media-related charts lately, one I do not care for here is Tribune Media (TRCO). The stock is putting in a confirmation breakdown day here.
Yesterday, price lost support from a descending triangle and today we've breached the Aug. 24 lows. After a short consolidation, this price action puts us bearish until we see a close over $38. That close could at least get us back to neutral, but the bulls are at a longer-term loss here as long as we stay under $40. The downside target isn't huge around $34, but expectations for the upside are mute.
No one really wants to sit around and have their stock do nothing or slowly bleed lower. We've seen a bullish crossover in the longer term MACD, but it did absolutely nothing for the stock. Now we are staring at another potential bearish crossover while the Relative Strength Index (RSI) and Ultimate Oscillator sit in very bearish territory, yet neither is oversold. The Bollinger Bands are opening up as price moves lower, which is the bearish knife in the back here. Momentum, trend, price and volatility are all bearish. If you are searching for a contrarian play for a reversal, TRCO doesn't look to have it yet.
Mead Johnson Nutrition (MJN) is hoping the Aug. 24 low holds. It held yesterday on a closing basis and acted as support on an opening basis today. This stock is green while the overall market is red, but don't get too excited. Again, momentum, price, volatility and trend are all working against this stock. Add in the resistance on the descending triangle at $74.25 and the 10-day simple moving average (SMA) at $74.56 and this one will require a big push to reversal. A move over $75 would have me interested long, as I believe we would see a quick pop to $78 or even $80. If this stock does close below that Aug. 24 low, I would look for a move into the $68 to $70 area.
Neither of these charts appears to have a huge downside potential, but both look set to struggle. What I find attractive is they have clear flip positions, prices where I would flip from bearish to bullish, so they can remain on the screen as reversal candidates. However, until that trigger is flipped, I would expect both names to underperform the overall market, which lands them squarely in the bearish camp.