When buyers fail to show up at the price where they previously paid, it’s a sign of weakness for a stock. You don’t need a thorough understanding of technical analysis to appreciate this. It’s not that much different than a goods store marking down merchandise since it’s not being purchased at the old price.
When an equity breaks below a previously invulnerable support area, that kind of price action is noticed by the algorithms of Wall Street. Actual human beings also track breakdowns like this and advise senior portfolio managers of the new risk. This can often lead to further dumping and lower prices.
Salesforce, JP Morgan And 2 Others Now Below Support Levels.
The software maker gapped down to well below the early April low of just above $290. That’s the previous support level — where, last time around, enough buyers came in to overcome the selling. Today’s price action is the opposite: the big reddish volume bar below the prices shows how heavy the unloading was.
Salesforce has a market capitalization of $267 billion and sits among the other 29 elite stocks on the Dow Jones Industrial Average. Note on the chart, that the price is now below the 50-day moving average — and quickly. Is the up trending 200-day moving average now a target?
The game-maker hit another new low today after breaking below the previous support level — from late November 2023. Gamestop is New York Stock Exchange traded and has a market capitalization of $3.08 billion. Short float is 24.63% and those shorts have been right lately.
Back in August 2023, the stock traded at $22 and it now goes for less than half that, $10. You can see that the 200-day moving average has been down trending for months now — and that the 50-day moving average has turned downward as well. I’ve red-circled the April price chart action.
The big bank with a market cap of $525 billion is another of the Dow Jones Industrials that broke down in April. The stock gapped down Friday, continued slightly lower Monday and then found enough buyers to close slightly positive. The late March low got taken out last week with a gap down on big selling volume.
You can see how JP Morgan now trades below its 50-day moving average. The lower red-dotted line indicates the next significant support level where January buyers showed up and stopped some selling from taking it further down. Note that the 200-day moving average is up trending at about the same spot.
A health care sector stock, the company manufactures medical devices. With a market capitalization of $106 billion, the Ireland-based Medtronic has earnings down by 1.77% this year and a gain over the past 5 years of 4.43%. The price-earnings ratio is 25.
The stock on Friday dropped to below the February and March support levels, as indicated by the red-dotted line. Medtronic seems to be finding enough buyers at the 200-day moving average to stay above it. For how long? A downside target might be that November 2023 gap zone, red-circled.
