Chart Of The Day: Procter & Gamble Shares Losing Momentum Even Ahead Of Earnings?
Investing.com | Jan 22, 2020 07:30
Procter & Gamble (NYSE:PG) is due to release corporate results Thursday before the market open, for the fiscal quarter ending December 2019.
Get The App
Get The App
We expect EPS of $1.37, unchanged from the previous quarter, up from the $1.25 for the same quarter last year, while revenue is anticipated to $18.41 billion, up from the $17.45 billion of the previous quarter which is even higher than the $17.16 billion for the corresponding quarter last year.
Get The App
Get The App
P&G earnings have beaten estimates for 15 straight quarters and revenue for five. Will the streak continue? And if it does, why has the balance of supply/demand traded like it may not? Though we can’t know for certain that the collective investor does not expect an upside surprise for these earnings, this could be a sign that the stock is running out of steam.
Get The App
Get The App
Get The App
Get The App
Shares have been trading within a converging pattern since Oct. 1 with an upward bias. This is called a rising wedge. It demonstrates that while a stock has indeed been rising, the rate of the climb has been slowing.
Get The App
Get The App
This flags the possibility that investors may begin to lose patience at not seeing the same kind of returns they'd become accustomed to before the pattern emerged. This is underscored by the 100 DMA as a moving uptrend line that provides a fair measure of the uptrend, as well as marking the bottom of the rising wedge as a significant technical pressure-point.
Get The App
Get The App
The current share price is as about 25% above its uptrend line since the May 2018 bottom. Compare that to the Dow Jones Industrial Average, its index. It is only about 7% above its uptrend since the nearest bottom in December 2018. If we consider the uptrend line as the normal rate of ascent throughout a period, Procter & Gamble’s spike is almost four times as sharp as that of the index on which it's listed, giving it a lot of room to fall in order to return to a sustainable rally.
Get The App
Note the negative divergence between the RSI’s falling channel and the rising wedge of the stock, another bearish indicator.
Get The App
Conservative traders would wait for a downside breakout, with at least a 3% penetration to avoid a bear trap, then wait for a pullback to demonstrate resistance by the bottom of the wedge.
Get The App
Get The App
Moderate traders would wait for a downside breakout, with a minimum 2% filter, to avoid being knocked out of position by a whipsaw, then wait for the expected return move for a better entry, not necessarily for proof of a reversal.
Get The App
Aggressive traders may short now, providing they understand the pattern is not complete before a downside breakout and are willing to accept the risk.
Get The App
Trade Sample
Get The App
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.