Spirit Realty Capital Is Lacking 'Spirit'

 | Mar 16, 2017 | 2:15 PM EDT
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Spirit Realty Capital (SRC) was downgraded by TheStreet's Quant Ratings service today. (If you are looking to check-up on the stocks you currently own or are looking for new ideas, you can a full database of password-protected ratings reports in our proprietary ratings screener.) Taking the downgrade as a jumping off point we looked at the Dallas-based REIT's charts and indicators.

In this daily bar chart of SRC, below, we can see a small triple-top formation from July through September followed by a decline. There is a belated bearish death cross of the 50-day moving average line and the 200-day moving average line in late November after much of the decline. Prices tried to stabilizer from November to March but beneath the surface there was more selling. 

The On-Balance-Volume (OBV) line moved steadily lower from a September high and weakened further in the last few months. Price made a lower low in March and our momentum study made a lower low and thus no bullish divergence to foreshadow a rally or bounce.

In this three-year weekly chart of SRC, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line is weak and the weekly Moving Average Convergnce Divergence (MACD) oscillator is in a bearish configuration. From 2015 there is some chart support in the $10 to $9 area but with such weak technical signals and a quantitative downgrade by TheStreet the path of least resistance seems to be down.

Bottom line: Avoid the long side of SRC.

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