With a new month gives us new monthly charts for trading. Everything the market does is an opportunity to observe. Whether that’s a weekly chart, monthly chart or another timeframe.
I love when the calendar flips to a new month. Getting a look at the fresh closed monthly candlesticks is a fun task for me. Bonus points if the monthly close comes during the weekend, allowing some extra time to dig through the charts.
Let’s not waste any time and get a look at these charts. Below are three monthly charts. However, The Good, The Bad and the Ugly may not be 100% accurate. In the world of Wall Street, we might instead say, The Bull, The Bear and the Mixed.
On a weekly basis, Nike isn’t giving us a ton to work with. The stock continues to trend lower, albeit slowly, as the 10-week moving average weighs on the price.
However, we finally have a nice reset on a monthly basis. Nike is giving us an inside month, with April’s trading range completely contained within March’s trading range.
From here, I’d love to see an inside-and-up rotation over $138.24. That could put the $145 to $147 area in play and potentially a breakout over $150.
On the downside, the stock does face the risk of a two-times monthly down rotation. That comes on a close below $125.44. That would also put Nike below the 10-month moving average.
Now for our potential bear. Both the weekly and the monthly charts look uninspiring for Zoom Video. Keep in mind, I like Zoom as a business. However, I am simply following the technicals here.
The 10-week moving average continues to weigh on Zoom. In March, it broke the 10-month moving average and failed to reclaim it in April. The stock did give us an inside month, although the risk becomes clear now: An inside-and-down rotation.
A daily close below the $310 to $314 area could kickstart a decline down toward $300 and would put a potentially larger correction in play. Who knows, maybe Zoom sees $250 as a result.
On the flip side, this chart becomes incredibly un-bearish if Zoom is able to go monthly-up over $345.
That will put Zoom stock back over the 10-month moving average and last month’s high, potentially allowing it to power higher. Over $360 and perhaps $400 is back on the table.
For now though, keep a close eye on that $310 to $314 area.
Caterpillar is a really interesting chart here. On a weekly basis, I love it. On a monthly perspective, I’m hesitant.
After 11 weeks without touching its 10-week moving average, we finally got a reset to this level. Earnings are out of the way and in most cases — even in this case, technically — a weekly-up rotation could get this stock moving again.
However, a weekly-up quickly puts Caterpillar in a potential monthly-up scenario. That’s as the $236 to $238 area has been resistance over the last two months. If the stock can clear this zone, we could get a further rotation higher.
That said, I’m hesitant of a monthly-down rotation below $223.20.
That would send shares below the 10-week moving average as well. I don’t know where the downside could land Caterpillar in that scenario. Perhaps $200 would be in play. However, it’s been on an extended run and there is a bit of divergence on the monthly chart.