Weyerhaeuser (WY) was downgraded today by TheStreet's Quant Ratings service. Because I believe in the benefit of combining technical analysis with other methods of analyzing security prices, I took a look at the charts and indicators of WY today.
In this daily bar chart of WY, below, we can see a weakening pattern since April. WY has been making lower highs and lower lows since April. This month prices weakened further when WY closed below the declining 50-day moving average line and below the still rising 200-day moving average line.
The daily On-Balance-Volume (OBV) line has been roughly following prices lower since April. A weakening OBV line tells us that sellers of WY have been more aggressive with heavier volume being traded on days when the stock has closed lower. The daily Moving Average Convergence Divergence (MACD) oscillator is in a bearish configuration below the zero line.
In this weekly bar chart of WY, below, we can see that prices have closed below the rising 40-week moving average line. The weekly OBV line has been weakening since April 2016 as prices have zigzagged higher. This difference may finally be coming home to roost, so to speak. The weekly MACD oscillator is in a bearish mode and poised to cross below the zero line for an outright sell signal.
In this Point and Figure chart, below, we can see the recent selloff and break of support. The $28 area is a tentative price target.
Bottom line: The combination of a weak chart and a quantitative downgrade could be too much for WY to handle. WY could work lower to the $29.50-$28.50 area is the weeks ahead.