Reader Chart Request: HCP and American Airlines Group

By | February 20, 2016

(Remember my analysis reflects my personal opinion of the technical condition of a particular stock chart, and is not to be considered as a recommendation to buy or sell a stock.)

HCP (HCP)

HCP (HCP) is a health care REIT with an 8.5% dividend yield. The stock price is down 35% over the last year.

The weekly chart shows the steady decline in the stock from its 2015 highs which accelerated this month when the company issued weaker than expected guidance for 2016. That move took it back down to the $25.00 level or roughly the area of the 2007 and 2008 highs, and the test coincides in time with a key period on the Fibonacci timeline.

99986.HCPweeklychart

99986.HCPdailychart

The stock saw a six session bounce off the long term support line but still has a lot of work ahead of it to just close this month’s gap. On the more positive side, the RSI is moving out of an oversold condition and Chaikin money flow is back above its centerline.

The risk/reward ratio is low for this stock.

American Airlines Group (AAL)

At first glance, it looks like a large head and shoulders pattern on the weekly chart of American Group (AAL), with a double top head and a rising neckline. But it has been my experience that long term expanded patterns seldom play out as they would on a short term timeframe.

99986.AALweeklychart

The stock price came back down to test the neckline and potential channel support in the $36.00 area and managed a substantial bounce off that level, breaking above a downtrend line drawn off the highs since December last year. The weekly technical indications are flat but on the daily timeframe they are reflecting the recent positive price and money flow momentum.

99986.AALdailychart

The technical picture is undefined right now with many stocks like AAL, which experienced a strong bounce these last eight trading sessions. The moves were abrupt and generally not off well established bases. This stock has potential after a successful retest of the downtrend line or an upper candle close above the $40.50 interior support line, but from a trading perspective there are better candidates.

Leave a Reply