One Mad Money viewer asked about Signet Jewelers Ltd. (SIG) in the Lightning Round Wednesday night. Jim Cramer did not pull his punch: "They are in the penalty box. Things are not working."
Let's check out the charts and indicators.
In the daily bar chart of SIG, below, we can see a costly downtrend the past ten months. Back in September SIG was trading above $65 and today it is approaching $15. Heavy volume downside gaps in December and January have marked the way lower. The slopes of the 50-day and the 200-day moving averages have been bearish.
Trading volume from April has increased and the daily On-Balance-Volume (OBV) line has weakened the past three months telling us that sellers are still acting aggressively despite the long decline the past year. The Moving Average Convergence Divergence (MACD) oscillator has been below the zero line since October.
In the weekly bar chart of SIG, below, we can see a four-year downtrend. The 40-week moving average is bearish and prices are below that line.
The weekly OBV line has been bearish since September and tells us that sellers have been more aggressive. The weekly MACD oscillator is bearish.
In the long-term monthly bar chart of SIG, below, we can see that prices have given up nearly all of the rally from 2009. Trading volume has been heavy on the decline, which is not a good sign.
The monthly OBV line is bearish as is the MACD oscillator.
In this long-term Point and Figure chart of SIG, below, a price target of $5 is being projected. Don't fight the trend.
Bottom-line strategy: SIG has been in a downtrend for a long time. Don't fight the trend and do not try to pick a bottom.