PPG Chart Pattern is Bearish

 | Feb 28, 2018 | 12:24 PM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


PPG Industries (PPG) was last reviewed on Real Money at the beginning of August, where I wrote, "Bottom line: It looks like PPG has made yet another top pattern and a break below $101 could open the way to declines in the low $90s." Looking back at the charts this morning we can see that PPG did not break below $101. Prices subsequently rallied to a January zenith and corrected lower in early February. The recovery rally in PPG stopped halfway into overhead chart resistance in the $116 to $122 area and prices have gapped lower this morning. Is this a pullback to buy or is the uptrend in trouble? Let's check and see if the charts are any help in reaching a decision.

In this daily bar chart of PPG, below, we can see that PPG has tested the 200-day line a number of times in the past twelve months -- in last March, In August and September and earlier this month. Prices opened sharply lower today and got close to the 200-day line before firming. We don't know where prices will close today but we can't rule out further price weakness and a test or a break of the 200-day line in the near-future. The slope of the 50-day moving average line has begun to turn negative. The On-Balance-Volume (OBV) line weakened significantly in July and since then it has been in a wide up and down range showing both accumulation and distribution. The Moving Average Convergence Divergence (MACD) oscillator made a high in late October and has performed weakly since even when prices made a new high in January.

In this weekly bar chart of PPG, below, we can view the price action in at least two ways. First we can consider the past three years to be a large sideways trading range or we can see a sideways range followed by an uptrend since late 2016. Prices are above the rising 40-week moving average line but it will not take much of a decline to break this mathematical trend. The weekly OBV line has been neutral for the past year and the MACD oscillator is in a bearish configuration as it turns lower.

In this Point and Figure chart of PPG, below, we can see that prices in between chart support and overhead resistance. Another reversal to the downside to $107.61 would be bearish while a rally to $118.86 would improve the picture a modest amount.

Bottom line -- PPG has made a number of rally failures since late October and while not all the indicators are bearish, the overall pattern of the price action tells me to be very cautious or to stand aside on any long position on this stock.

Columnist Conversations

In GS I see key price support at the 224.49-226.42 area.  I also have timing for a possible low.  I ...
Tesla (TSLA) has tested our long-term bounce zone @ 283.90-258.95 a few times. These have been BUYING opportun...
We have a big winner here, let's roll it up to a higher strike   SOLD SRPT NOV 140 CALL AT 26 (in ...
We still like this name and want to give it more time. SOLD AAPL OCT 220 CALL AT 6.9 (in at 10) BOUGHT A...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.