Ctrip.com International (CTRP) was downgraded by TheStreet.com's quantitative service on Wednesday, so we decided to take a look at the charts and indicators to see if this alert also signaled something on the technical scene.
In this daily chart of CTRP, above, we quickly notice twin peaks in April and September -- two highs at nearly the same price. Visually equal, but look below the surface. The On-Balance-Volume (OBV) line, which is a cumulative running total of up-volume versus down-volume, peaked in early December and has been in a downtrend ever since. The OBV line looks like it is poised to make a new low for the move down, foreshadowing further price weakness.
Despite the equal price highs beneath the surface, selling was heavier on the second advance. Recently, prices declined below the still-rising 50-day simple moving average line and the declining 200-day line. The Moving Average Convergence Divergence (MACD) oscillator recently generated a liquidate longs sell signal, and if it declines below the zero line it will be an outright sell signal.
In this three-year weekly chart of CTRP, above, we can see that prices just declined below the 40-week moving average line, which recently turned lower. The OBV line on this weekly time frame is also bearish. The MACD oscillator is poised to signal a new sell signal.
Bottom line: A weak chart and a quantitative downgrade seems to be enough to give the bears the upper hand. I would look for CTRP to decline to retest support around $38. Failure to find buying interest at $38 could lead to a deeper decline to $30 over the next month or two.