Why These 3 Top Stocks Near Buys Look Alike As Tesla Woes Grow; S&P 500, Dow Jones Futures | Stock News & Stock Market Analysis

Futures for the S&P 500 index, Nasdaq 100 and Dow Jones industrial average were fractionally higher Wednesday afternoon after China trade-war fears hit stocks. Alibaba (BABA) archrival Tencent (TCEHY), Visa (V) and AbbVie (ABBV) are all setting up in cup bases. Meanwhile, Tesla (TSLA) stock is struggling with three technical challenges as Elon Musk faces an executive exodus and fresh manufacturing concerns.


S&P 500 index futures rose 0.1% vs. fair value. Dow Jones futures were up about 0.1%. Nasdaq 100 futures were just above break-even.

Tencent, Visa, AbbVie Follow The Market

Tencent, Visa and AbbVie all peaked on Jan. 26. They all sold off into early February, then rebounded strongly, pulling back modestly at the end of last month but holding support around the 50-day moving average. That mimics the action of the major averages, which all peaked on Jan. 26 before entering a fierce, brief correction.

Since then Tencent, AbbVie and Visa have looked like a combination of the S&P 500 index and Nasdaq composite. Like the Nasdaq, the stocks found support at the 50-day line. Like the S&P 500, which is now above its 50-day, the stocks haven’t hit new highs.

This is a clear example of how stocks — even highly rated ones like Tencent, Visa and AbbVie — tend to follow the market. That’s why it’s critical to follow the actions of the major averages and leading stocks. Reading the Stock Market Today columns and The Big Picture will keep you in sync with the market.

Visa, Tencent and AbbVie are all in cup-with-handle bases. Technically, they are two days short of the seven-week minimum for a cup-with-handle pattern. Cup-without-handle bases are valid at six weeks. So if the stocks clear these handles on Thursday or Friday, there is a slightly added risk.

In any case, Dow Jones component Visa has a 125.40 buy point, settling Wednesday at 122.58.

AbbVie, closing Wednesday at 188.94, has a 122.10 entry.

Tencent has a 59.54 buy point and closed Wednesday at 58.65.

Alibaba, Tencent’s rival for Chinese internet dominance, has a similar chart pattern at first glance. But the midpoint of its handle is below the midpoint of the base, so Alibaba is in a cup-without-handle base with a 206.30 entry.

Tesla’s 3 Technical Woes

Tesla fell 4.45% to 326.63 in Wednesday trading. The stock tumbled through two support lines, the 50-day and 200-day moving averages. Meanwhile, Tesla’s relative strength line is near recent lows. The RS line, which tracks a stock’s performance vs. the S&P 500 index, has been gradually declining since last June.

Tesla has struggled with Model 3 production levels, slashing output goals several times in the last several months. And there are many reports of significant manufacturing defects with the entry-level luxury sedan. Tesla employees told CNBC that  the company is making a high level of faulty parts, requiring costly, time-consuming fixes.

Meanwhile, two top Tesla finance executives have left in the past week after the global sales and services president exited in February. That puts more pressure on Musk to manage Tesla’s operations and attract new high-level staff.


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Originally posted 2019-09-19 23:10:59.


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