PG&E Corp. (PCG) felt the power of gravity and a few other forces Thursday, plunging 6.72%. In fact, the stock is having its worst week in seven years as wildfires continue in California.
We last reviewed PCG in February of last year and we gave it a positive spin, "Aggressive traders could buy some PCG at current levels and add to longs at $59 and $60 with our $68 initial upside target. A close below $54 would make us question the bull case."
Taking a victory lap, prices did reach our $68 price target and touched a high of $71.57 last month, but yesterday prices reversed directions and touched $64.42. Thursday's slide or rout got our attention. Let's look at the latest charts and indicators.
In this daily bar chart of PCG, above, we can see that prices made higher highs and higher lows from December -- the simple definition of an uptrend. There was a hint of weakness in July when PCG made a slight and temporary new low. More signs of weakness were visible in late September when prices closed below the 50-day moving average line.
In the past two weeks rebound rallies in PCG have failed at the underside of the 50-day average. Yesterday prices plunged below the rising 200-day average line. Volume was heavy and the On-Balance-Volume (OBV) line made a new low for the recent move down, signaling increased aggressive selling.
The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside in early September with a take profits sell signal. In late September an outright sell signal occurs as the indicator crosses below the zero line.
In this weekly bar chart of PCG, above, we can see that prices are below the rising 40-week moving average line. The weekly OBV line has turned down in the past five weeks. The weekly MACD oscillator has been in a bearish mode for several months.
In this Point and Figure chart of PCG, above, we can see the recent sharp decline. A further loss to $64.14 will break the lows at $64.78 and probably prompt further declines.
Bottom line: When prices make a big slide in one day you typically see one of two outcomes the next day. First you could see further weakness. Chart support for PCG is down in the $62-$60 area. Or if traders think the decline was "overdone" you might see a short-term rebound. Either way PCG will need a period of repair probably around the low $60s.
