Bunge's Quant Downgrade Accentuates How Weak the Stock Really Is

 | Oct 12, 2017 | 2:28 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

bg

Bunge Ltd. (BG) was downgraded by TheStreet's Quant Ratings service Wednesday. I took a look at the charts and indicators on BG this afternoon and I can second the downgrade with a triple-top on the weekly chart (second chart below).

Let's check out the charts and indicators of BG now and see how much of a selloff we could be in for.

In this daily bar chart of BG, below, we can see that prices have been declining since late May. Prices are trading below the declining 50-day moving average line and the 200-day moving average line, which has also turned lower. In late September the 50-day line moved below the slower 200-day line for a bearish dead cross. 

The On-Balance-Volume (OBV) line has been declining since late May with more volume being traded on down days. The trend-following Moving Average Convergence Divergence (MACD) oscillator has spent much of the past five months below the zero line telling us that the trend has been negative. BG found support in the $68-$66 area a number of times before (May and Jan./Feb.), but this time around prices may not hold.

In this weekly bar chart of BG, below, we can see that prices are below the declining 40-week moving average line. The chart shows three peaks in the past year in the $80-$85 area. This possible triple-top formation could produce a still deeper decline in the months ahead. The weekly OBV line is pointed down and the weekly MACD oscillator just crossed below the zero line for an outright sell signal.

In this Point and Figure chart of BG, below, we can see the extreme lows at $66.08 on this kind of chart. A break of these lows, or if you will a break of support, will likely precipitate further declines.

Bottom line: BG could bounce in the short-run but the bigger picture and the quantitative downgrade suggest lower prices in the weeks and months ahead.

Columnist Conversations

Short-term signals have been quite good recently. No short term overbought conditions are in place at this ti...
Stericycle (SRCL) came in shy of estimates for the fourth quarter. The stock has been crushed. As of 11:17 AM...
Join me for a free webinar later today with my Real Money colleague and good friend Toni Turner.  Toni is...
Just off the horn with Roku's (ROKU) CFO -- he still seemed darn upbeat on the story to me. Even still, will ...

BEST IDEAS

REAL MONEY'S BEST IDEAS

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.