After a Five-Day Decline, Breadth Metrics and Fibonacci Levels Hint at Further Downside - Chaikin Analytics
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After a Five-Day Decline, Breadth Metrics and Fibonacci Levels Hint at Further Downside

US equities closed mostly lower on Wednesday after a morning rally was not sustained. Technology was the only sector to finish higher on the day. Energy was the biggest loser. Treasuries were mixed with the curve steepening. Gold ended down 0.4%. WTI Crude settled down 2.3%, dropping for a fourth consecutive session.

While the move lower for the SPY over the past five days has been swift, the deterioration in market breadth points to the possibility of further downside in the near-term. Using Fibonacci retracement levels on the advance from the December 2018 lows to last week’s high, we can see that the 38.2% retracement level is at $298; the 50% retracement level is at $286 and the 61.8% retracement level is at $274. In the near-term, the 200-day moving average is near $304.            

Stock of the Day – Hess Corporation (HES) – Very Bearish Rating

Hess Corporation (HES) has a Very Bearish Chaikin Power Gauge Rating and has been lagging the SPY since November. The OB / OS Indicator is moving lower in an overbought position and Chaikin Money Flow is bearish. HES is below the declining long-term trend line and triggered a Relative Strength Breakdown Signal today. Below $62.60, the stock is likely to trade lower.  

The Chaikin Power Gauge Rating for HES is Very Bearish due to very poor financial metrics, very weak earnings performance and very negative expert activity. The stock also has strong price/volume activity. HES’s financial metrics are very poor due to a high price to book value. HES’s earnings performance is very weak as a result of poor EPS growth over the past 3-5 years.

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