Shareholders of Whirlpool (WHR) had a rude awaking Tuesday as prices plunged sharply lower. Shares of WHR are trading lower again today so a check on those washing machine settings, err ... rather the indicators is in order.
If you look closely at this daily chart of WHR, below, you can see a bearish death cross as it happens. The price weakness in WHR since early August has turned the 50-day moving average line down to cross the 200-day moving average line. Moving average signals by definition are late, but they are widely followed and their signals are not open to debate like other technical tools. The breakdown yesterday also broke the chart support around $160. The $140-$130 area is the next area of support from early this year.
The pattern of volume right below the price chart is uneven, but when we take that data and use a little math we get a declining On-Balance-Volume (OBV) line. With the OBV line pointed down for the past three months we know that sellers were more aggressive long before Tuesday's gap. The 12-day price momentum indicator might be giving us a bullish divergence, but right now it is too soon to tell.
In this weekly chart of WHR, below, we get some additional clues to reinforce the bear case. Prices are below the 40-week moving average line. The weekly OBV line has been declining and the MACD oscillator is below the zero line for an outright sell signal. We noted the $140-$130 support area in the paragraph above, and we can see how that area has responded the past two years.
WHR will probably need a house call and a period of consolidation to repair the damage on the charts -- a white sale is just not going to do it, in my opinion.