Chart of the Day: This Holding Was Slammed. How's It Looking Now?
Is an opportunity arising amid bearish characteristics?
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With the huge drop in AI and energy-related names Monday there were no names in that space that weren't affected by the bloodbath. Stocks were hit hard, and some charts are just hideous, like Eaton ETN. The stock was bludgeoned on very heavy turnover, and the damage was palpable.
The last couple of days there has been some effort by the bulls to pick up the stock but to no avail. We see much better support down in the $280-287 range, where buyers stepped in back in September (top pane). Candles turned bearish (pink/purple), so that trend is now in place.
MACD (moving average convergence/divergence) is on a sell signal and momentum (stochastics) are pointing lower. Money flow has also been weak for months, as shown in the bottom pane.
When stocks get hit hard on a day like Monday it is best to just wait, be patient and look for an area where buyers and sellers can come together on price. We added some of this the other day on that big drop at a really good price and may look to add more down the road. Price discovery remains the focal point, so buying on this two-day upswing would simply be guessing where the stock is going to bottom out. Not a good practice.
We do like Eaton in TheStreet Pro Portfolio and rate it a Two, or "stockpile on pullbacks."
At the time of publication, TheStreet Pro Portfolio was long ETN.
