Yesterday it was easy to find ugly charts. Today that's a hard thing to do. The bounce has held in the early going, which is a huge plus for bulls. The general notion seemed to be we would fade, however. There's still plenty of time left in the day, but so far, so good.
What's not looking as good on the daily charts is CDK Global (CDK). The stock started strong, but notice the big tail so far intraday. Buyers weren't convinced. Now we've faded close to the day's lows while the technical setup works against the stock. The 10-day simple moving average (SMA) is set to close below the 50-day SMA. That's been a trying setup for bulls. The force index is showing a bearish divergence hitting new lows in front of price while several other indicators have gone bearish, including moving average convergence divergence (MACD), the relative strength index (RSI) and ultimate oscillator.
Even in a bullish push in the overall market, it can be difficult for an individual name to follow the group when trend, momentum, volume and price are all bearish. That's the case with CDK. Should the stock lose support, I believe $44.50 will be tested at a minimum during October.
The weekly setup in CDK has more of a neutral feel to it at the moment. This descending triangle pattern offers potential for both bulls and bears in terms of price. A weekly close under $45 puts a $40 price target on CDK's head while something above $51 will open the door back up to $50. Unfortunately for the bulls, we've seen the RSI dip below 50 and the attempted bullish cross in the MACD was rejected in September. This one doesn't have a long trading history, but we haven't seen the On-Balance Volume drop below the 20-week SMA and the stock is threatening to do that.
Overall, the secondary indicators favor the bears here. Any short should use the $51 level as a stop and the $45 level as a profit scale level. I'm inclined to see how the week closes unless we get a trigger on the daily chart.