FactSet Research Systems Inc. (FDS) came up during the Lightning Round of Mad Money Tuesday night. "That's a really good company," said Jim Cramer in response to one caller. FactSet is probably a fine company but it is the stock that we are concerned with and that can be a whole different story because the marketplace is a discounting mechanism.
Let's check out the charts and indicators of FDS.
In the daily bar chart of FDS, below, we can see that prices made a straight-line rally from late December to June. FDS has weakened since June closing below the now declining 50-day moving average line and breaking the bottom end of nearby support in the $285-$270 area.
The On-Balance-Volume (OBV) line peaked a month earlier in May and its weakness signals that sellers of FDS have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator peaked in early May and last month it fell below the zero line for an outright sell signal.
In this weekly bar chart of FDS, below, we can see a bearish setup. FDS got extended above the rising 40-week moving average line.
The weekly OBV line has been topping out the past three months and the weekly MACD oscillator has crossed to the downside for a take profits sell signal.
In this Point and Figure chart of FDS, below, we can see a potential downside price target in the $250-$248 area.
Bottom-line strategy: With our eyes on the stock more than the company we see a downside risk for FDS. Key support should be found in the $240 area.