H&R Block (HRB) , was reviewed in early May when the charts looked strong, and I wrote that, "Traders could go long HRB at current levels and risk a close below $23. The $31-$32 area is our intermediate-term price objective." Prices did move up from that recommendation but stopped short of $31 and gapped sharply lower. Our suggestion of using a close below $23 is not much comfort. Time to "refile" the charts of this stock discussed by Jim Cramer Wednesday night on Mad Money.
In this updated daily bar chart of HRB, below, we can see the abrupt downside price gap. HRB gapped below the 50-day and the 200-day averages. Volume was very heavy as traders and investors voted with their feet. The early November lows were broken but it looks like prices may be stabilizing. Both the On-Balance-Volume (OBV) line and the MACD oscillator turned lower.
In this weekly bar chart of HRB, below, the price gap turns into a long down bar because of the nature of the construction. Prices are retesting the top of a consolidation pattern from March 2016 to March 2017 in the $24-$20 area. Prices could hold around the $24 and build a new base but that is a difficult call. Prices are below the declining 40-week moving average line. The weekly OBV line has turned down as has the MACD oscillator.
In this Point and Figure chart of HRB, below, we can see a long column of "O's" and no gap as this charting technique does not have gaps. A downside price objective of $17.98 is being indicated -- off the bottom the chart. A rally to $24.43 will be the start of a comeback.
Bottom line: HRB has not triggered our suggested stop loss but that doesn't make me feel better. If HRB can creep back toward $26 to fill part of the price gap I would use that to exit longs. There are other opportunities elsewhere.
