Shares of Generac (GNRC) have picked up a new fan from a sell-side firm starting fundamental coverage with an "overweight" rating. However, the stock has been more than cut in half in just seven months and we could be in for further declines.
Let's power up a few charts to see what's happening.
In the daily bar chart of GNRC, below, we can see the big decline in price the past year. Prices declined into a low in May and have been retesting that low in June. Trading volume has been heavy in the past two months suggesting a change of ownership from weak hands to stronger hands but the On-Balance-Volume (OBV) line has remained in a downward trend. A weak OBV line tells us that sellers of GNRC are more aggressive than buyers and this tends to point the way lower for prices.
The Moving Average Convergence Divergence (MACD) recently turned down below the zero line for an outright sell signal.