Time to Get off the Cullen/Frost Bankers Ride

 | Mar 17, 2017 | 10:24 AM EDT
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Stock quotes in this article:

cfr

Cullen/Frost Bankers (CFR) has been a "double" from its 2016 low -- very impressive, but the time may have come to take some money off the table. Nothing is screaming "sell", but the indicators suggest we have seen a good run and it is wise not to overstay one's welcome.

In this daily bar chart of CFR, above, we can see the action of the past 12 months. We don't see the nadir in early 2016, but we do see a very impressive advance since April. Prices are still above the rising 50-day moving average line, but the line has been tested several times since the beginning of 2017, including this week. The 200-day simple moving average line is rising and was last tested in late June/early July.

The On-Balance-Volume (OBV) line is not giving us a robust confirmation of this advance. It is up from April and made a fresh high in January, but prices have gone up a lot more than the OBV line. In the lower panel is a bearish divergence between the higher price highs since November and weaker momentum readings. For five months, the pace of the rally on CFR has slowed. A slower pace for a rally tends to mean that prices have reached a level where investors are willing to supply more stock (read resistance).

In this three-year weekly chart of CFR, above, we can see the full extent of the rally from below $45 to over $95. CFR is above the rising 40-week moving average line. The weekly OBV line has been pretty neutral for most of the entire move up and is not a strong vote in favor of the rally continuing. The weekly Moving Average Convergence Divergence (MACD) oscillator is crossing to a liquidate longs signal.

Bottom line: all things, or rather indicators considered, the OBV lines both daily and weekly and the MACD crossover tell me that it is time to book profits on CFR. Send a thank you note, but I want to be neutral on CFR from here.

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