Signet Jewelers Has Too Many Imperfections to Buy

 | Mar 14, 2018 | 4:24 PM EDT
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Signet Jewelers Ltd. (SIG) has been in a downtrend since it peaked in late 2015. Prices are back to levels not seen since 2011 and old support is not likely to be much help. Is there risk of more weakness ahead? Let's look at a couple charts.

In this daily chart of SIG, below, we can see a number of price gaps on the chart. The most recent downside price gap has broken the lows of February and late May. Volume is heavy as longs are dumping positions. Prices are of course below the declining 50-day and 200-day moving averages. The daily On-Balance-Volume (OBV) line is weak and confirms the aggressive selling and price weakness. The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line in a bearish configuration.

In this Point and Figure chart of SIG, below, we can see two steep declines without price gaps. A downside price target of $44 has been left in the dust. Prices may be extended on the downside and we could be looking at a price low but we are not looking at a bottom. A bottom is a process and it is likely to take a long time on this security.

Bottom line: SIG has been is a downtrend for more than two years and we may not have reached a level where forward-looking investors are interesting in buying. Keep you powder dry.

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BIDU has triggered a buy entry against the cluster zone.  My risk can be defined either below the 5/23 lo...

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