In the beginning of Jim Cramer's Mad Money program Monday night Cramer looked at the winners and losers from the markets in the first half of 2019. With the S&P 500, Cramer nixed Coty Inc. (COTY) from the list due to its huge fall on Monday.
Let's check out the charts to see if the damage is over or if there is still more risk.
In the daily bar chart of COTY, below, we can see that prices rallied from $6 in December to the $13-$14 area in recent weeks. The 50-day moving average line turned upward in early February but it was broken as prices fell sharply Monday. The 50-day line crossed above the bottoming 200-day line in April for what is commonly called a (bullish) golden cross buy signal. The 200-day average line turned flat in May and could be tested or even broken in the days ahead.
The volume pattern looks a bit erratic since February. Some heavy volume days produced little change in price which I find unusual. The daily On-Balance-Volume (OBV) line started to move higher in January but shows a peak in May and some softness since then which suggests that sellers of COTY turned more aggressive a number of weeks before Monday's sharp decline.
The Moving Average Convergence Divergence (MACD) oscillator has been in a take profits mode since early March with a lower high in May. The MACD oscillator is close to crossing the zero line now for an outright sell signal.
In the weekly bar chart of COTY, below, we can see that prices are still above the flat/bottoming 40-week moving average line. The weekly OBV line shows a strong move up earlier this year but it has been stalled the past two months.
The weekly MACD oscillator has narrowed toward a potential take profits sell signal.
In this Point and Figure chart of COTY, below, we can see that prices have reached a price target and are in a potential area of support (looking at the volume by price bars on the left scale). Prices could hold here but they will need to prove themselves.
Bottom-line strategy: COTY could hold the low of Monday but I wouldn't count on it. A move below $10.50 or the intersection of the 200-day average line could precipitate further declines.
