The Kraft Heinz Co. (KHC) is all over the news this morning with its dismal earnings report and its sharp dividend cut. Even this technical analyst can see that this is bearish news and not likely to get better any time soon.
Sell side fundamental analysts are busy working this morning thinking of ways to say that the stock is undervalued and still a hold but that is their hangup. The media will be seeking comments from Warren Buffett but I like to keep it simple and look at the charts and indicators.
In this daily bar chart of KHC, below, we can see that prices were in a downtrend the past 12 months. KHC has remained below the bearish 200-day moving average line and any rally or bounce attempt has stopped at least $5 short of that long-term trend indicator. KHC did firm above the declining 50-day moving average line this month but prices are anticipated to open at a new all-time low this morning, putting KHC back below this shorter indicator.
The daily On-Balance-Volume (OBV) line has been in a downtrend the past year telling us that sellers of KHC have been more aggressive than buyers.
The Moving Average Convergence Divergence (MACD) oscillator has spent much of the last year below the zero line in negative or sell territory.
In this weekly bar chart of KHC, below, we can see the trading history of KHC. Prices have been in a downtrend since early 2017 and today we are very likely to see a new weekly low close. Prices are below the declining 40-week moving average line.
The weekly OBV line has been bearish for the past two years and a weekly cover shorts buy signal from the MACD oscillator is likely to be reversed to a new sell signal.
In this long-term Point and Figure chart of KHC, below, we can see a potential downside price target of $25 being projected. Ouch.
Bottom line strategy: Some technical analysts will say that KHC is oversold. Some fundamental analysts will say that KHC is grossly undervalued. The fact of the matter is that KHC has been in a downtrend for some time now and it has yet to make a last low nor start a bottoming process.