Shares of Kraft Heinz (KHC) were raised to an Outperform rating at a sell side firm Wednesday. Let's dig down in the charts and indicators to see if the glass is half full or half empty.
In this daily bar chart of KHC, below, we can see that prices dropped sharply in the past six weeks. KHC is trading below the 50-day moving average line and below the slower-to-react 200-day line.
The On-Balance-Volume (OBV) line topped in April and turned down in May telling us of a shift from aggressive buying to aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of KHC, below, we can see a potential double top pattern in the $44 area. A trough in the $34 area is the key level to break to start further weakness. KHC is trading below the 40-week moving average line.
The weekly OBV line shows a similar double top pattern. The MACD oscillator is pointed down and only slightly above the zero line.
In this daily Point and Figure chart of KHC, below, we can see a downside price target in the $32 area. This would break the low point of the double top pattern.
In this weekly Point and Figure chart of KHC, below, we see a price target of $26.
Bottom line strategy: I look at fundamental and quantitative recommendations without too much judgment as the chart picture is more important to me as an analyst. KHC could bounce in the short-run but the risk is for further declines in the weeks ahead. Avoid the long side of KHC.
