Watch Out For These Stocks As They Are Showing Signs of Weakness
An outperforming stock as compared to the broader market. It has a strong Relative Strength Rating of 73. The stock is up 145% from a year ago as compared to 48.2% for the Nifty500.
The stock has had a monster run post its breakout from a 6-week, 16% deep Cup Without Handle Base. The stock has gained 91% from the ideal buy point of INR 188 in just 24 weeks.
The stock definitely has strong institutional support. It has seen huge institutional accumulation in the most recent quarters. The number of institutional sponsors and shares held by the sponsors, both increased in the last reported quarter.
This week, Balrampur Chini stock sliced through the 10-week moving average line. The stock closed -2.76% down on - 9% lower volume than 10-week average. The current price is -0.3% below the 10-week moving average.
The long term support line, 40-week moving average, is still in uptrend. The stock is trading around 43% above the 40-week moving average.
It is not unusual for a leading stock to take support near its 10-week moving average. But if a stock closes below the line on heavy volume, the selling is not just a normal reaction. That usually indicates that the run might be coming to an end, at least for the intermediate term. The stock could certainly take support or rebound from the 10-week line, but all that is hypothetical. At this point, you can take at least partial profit.
Shree Cement has been a laggard stock for the last one year. It has had a 24% move as compared to 48.2% for the Nifty500.
On the earnings front, Shree Cement has an excellent EPS Rank of 82, which indicates consistency in earnings. The earnings and sales for the stock have grown by 21% and 9%, respectively over the past three years. Its 3-years earnings stability is 16, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 4% and 14%, respectively. The 5-years earnings stability is 20. The return on equity for the last reported year is 16%.
The stock sliced through the 40-week moving average line this week. The stock is down -1.78% on - 11% higher volume than 10-week average. It closed 3% below the 40-week moving average.
The large-cap stocks often take support near its 40-week moving average and set up a new base around the line for future move. But such base building may take months, even years. If it is a long term leader, we definitely can give it more room and time to stage a recovery. But, that’s not the case here. Shree Cement does not meet our long term leader’s trend criteria yet. At this point, we would consider this week’s close as a weakness in the stock.
Honeywell Automation has been a laggard stock for the last one year. It has had a 32.2% move as compared to 48.2% for the Nifty500.
On the earnings front, Honeywell Automation has an excellent EPS Rank of 80, which indicates consistency in earnings. The earnings and sales for the stock have grown by 23% and 4%, respectively over the past three years. Its 3-years earnings stability is 8, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 33% and 9%, respectively. The 5-years earnings stability is 10. The return on equity for the last reported year is 19%.
Honeywell Automation stock fell -2.35% this week, undercutting its 40-week moving average. It closed 3.41% below the 40-week moving average. However, the volume for the week remained below its 10-week average.
The large-cap stocks often take support near its 40-week moving average and set up a new base around the line for future move. But such base building may take months, even years. If it is a long term leader, we definitely can give it more room and time to stage a recovery. But, that’s not the case here. Honeywell Automation does not meet our long term leader’s trend criteria yet. At this point, we would consider this week’s close as a weakness in the stock.
Astral Ltd has been an outperforming stock as compared to the broader market. The stock is up 159.3% from a year ago as compared to 48.2% for the Nifty500. Most recently, the stock broke out of a 9-week, 28% deep Consolidation Base 13 weeks ago. However, the stock failed to make meaningful progress.
The stock definitely has strong institutional support. It has seen huge institutional accumulation in the most recent quarters. The number of institutional sponsors and shares held by the sponsors, both increased in the last reported quarter.
This week, Astral Ltd stock sliced through the 10-week moving average line. The stock closed -1.59% down on -34% lower volume than the 10-week average. The current price is -0.1% below the 10-week moving average.
The long term support line, 40-week moving average, is still in uptrend. The stock is trading around 26.3% above the 40-week moving average.
A closing below the 10-week moving average on heavy volume should be considered as a weakness in a stock, at least for the short to intermediate term. At this point, you should step back and look at your profit cushion on the position. If you do not have enough profit, from a risk management standpoint, you may want to cut the position. If you have enough profit, you can take at least partial profits.
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