Tyson Foods (TSN) reported an earnings and revenue miss Monday morning and trimmed their sales guidance. The food giant's stock opened Monday with a large gap to the downside.
Let's review the charts and indicators to see what's cooking.
In the daily bar chart of TSN, below, I can see that the share price has been in a downward trend the past year and a price gap to the downside is just a continuation of an existing decline. TSN trades below the declining 50-day moving average line and below the declining 200-day line.
The On-Balance-Volume (OBV) line declined into a March low before a temporary rebound. The Moving Average Convergence Divergence (MACD) oscillator is crossing back below the zero line for an outright sell signal.
In the weekly Japanese candlestick chart of TSN, below, we have to imagine this week's candle pattern. I used four years of price data instead of three years to get a better perspective. The shares are challenging the lows of early 2020.
Trading volume has been more active in the past six months so we might have an increased number of traders and investors who now have a losing position because prices have made a new low for the move down. The weekly OBV line bounced up in March and April but that advance may be reversed with today's weakness.
The MACD oscillator has been improving since October but that may end soon.
In this daily Point and Figure chart of TSN, below, the software is projecting a potential downside price target in the $39 area.
In this weekly Point and Figure chart of TSN, below, I can see the same price target as the daily chart above -- $39.
Bottom-line strategy: TSN has gapped lower on higher-than-average trading volume. This downside move could be an exhaustion move but it is too early to know that just yet. Without a price low and some bottoming price action I see no reason to catch a falling knife.
