As we roll into earnings season, the technical setups become a bit more unpredictable. I generally look for names that have earnings sometime in the distance, but even though Ameriprise Financial (AMP) has earnings next week, it still has made its way onto the bear chart of the day.
This is AMP's second appearance as the stock also showed up a few days into September and played out pretty well. The stock has moved off the low fairly well over the last two weeks. Unfortunately, just when things looked ready to power higher, AMP failed at resistance. Now the shares have lost the recent series of higher lows and look ready to retest at least the recent low around $103. A failure to hold $103 puts it on track to hit $100.
The recent bounce pushed the slow stochastics into overbought territory. Now that price has retraced, we've seen a bearish crossover while in overbought territory. This is a big yellow flag for me. The red flag comes into play when both the slowK (%K) and slowD (%D) fall back under 80. This triggered yesterday. At the same time, the commodity channel index (CCI) fell below zero, providing confirmation that trend is at best neutral, but tilted in favor of the bears.
As if this weren't enough, the 13-period relative strength index (RSI) has also fallen below 50, indicating momentum now favors the bears and the force index has returned bearish, falling into the red. Without a stellar earnings report, AMP looks headed for a test of $100.
The weekly chart does give us a rounding bottom, but until we see a close over $111, the price action is bearish and looks destined to create a consolidation in the yellow area on the chart. There has been a lot of volume in the $107 to $112 area, which will act as strong resistance should the stock fall under $107. Plenty of traders will be waiting to get their money back at breakeven on any little push in the stock should support fail. There haven't been any bearish triggers in regards to momentum, trend or volume, because they are all buried deep in bearish territory already. I'm watching for any kind of change in the vortex indicator, RSI or Chaikan money flow as these were good measures to follow in the August breakdown.
Watch for a bounce back into resistance today or tomorrow on the daily chart for a possible entry. Given earnings are close at hand, a defined risk trade is an absolute must here. More conservative traders may just opt to wait for earnings to pass then access the bearish setup at that point.