The Hershey Co. (HSY) was rated a new outperform (buy) rating by TD Cowen Wednesday, but the charts suggest there is further risk of prices weakening from here.
Let's review the charts.
In this daily bar chart of HSY, below, I can see that prices have slumped lower for more than four months. HSY trades below the negatively sloped 50-day moving average line and below the bearish 200-day line.
The On-Balance-Volume (OBV) line turned lower in early May and tells me that sellers of HSY have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of HSY, below, I see a bearish picture. Prices trade below the negatively sloped 40-week moving average line. Major support in the $220-$210 area has been broken. The weekly OBV line turned lower four months ago. The MACD oscillator is bearish.
In this daily Point and Figure chart of HSY, below, I can see that prices reached a downside price target in the $210 area.
In this weekly Point and Figure chart of HSY, below, I used a five box reversal filter and I can see a bearish price target in the $56 area.
Bottom line strategy: I have no idea what is driving the price of HSY lower but I am doing my part on consumption. Avoid the long side of HSY as further declines are possible.
