Supermarket giant Kroger (KR) was downgraded to a "sell" by a sell-side fundamental analyst and the stock is reacting (lower) Friday. So, let's check on the charts and indicators.
The last time we looked at KR was back on April 8 where we wrote, "KR peaked in August and worked down to the $31 area by December. KR has started a new upswing and aggressive traders who do not shop hungry could go long KR at current levels risking below $34." Let's see if a new strategy is needed.
In the daily bar chart of KR, below, we can see that the shares rallied from our April review. More recently prices are pulling back after touching a new high of $50. KR is testing the 50-day moving average line and remains above the rising 200-day line which intersects around $41.50 or so.
The On-Balance-Volume (OBV) line has moved up and down with the price action the past 12 months. The Moving Average Convergence Divergence (MACD) oscillator is currently pointed down towards the zero line.
In the weekly Japanese candlestick chart of KR, below, we can see a top reversal pattern in early January. Reversal patterns on candles can be either a turn lower or they can be a turn to the side. Prices are still above the rising 40-week moving average line.
The weekly OBV line shows a rise over the past three years and only a slight recent pullback. The MACD oscillator in this time frame is still positive.
In this daily Point and Figure chart of KR, below, we can see that prices met an upside price target of $48.
In this weekly Point and Figure chart of KR, below, we can see that even with a longer-term view the same $48 price target is shown.
Bottom-line strategy: So far it looks like KR is making a "normal" pullback within an uptrend. I don't know whether this sell recommendation will get company from other analysts but traders who are long KR from earlier recommendations could raise stop protection to $41 from below $34.
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