The Hershey Co. (HSY) reported soft first-quarter volume and the stock has weakened recently. Personally I have done my part in consuming more (or actually too much) chocolate in this stay at home environment.
Maybe the Times Square store needs to reopen and promote curbside pickup? How about it Mayor de Blasio? A dose of chocolate would make everyone in the Big Apple feel better.
Meanwhile, let's check out the charts of HSY.
In the daily bar chart of HSY, below, we can see that prices lost about 30% of their value in the pandemic selloff. HSY rebounded from its March low but stopped at the underside of the declining 50-day moving average line.
Trading volume increased into the March nadir but it did not seem to reach what I would consider capitulation level. The On-Balance-Volume (OBV) line, however, has been very steady for several months. It looks like the OBV line is now edging lower for HSY.
The Moving Average Convergence Divergence (MACD) oscillator has been narrowing in recent days and looks close to a downside crossover.
In the weekly bar chart of HSY, below, we can see more of a mixed picture. Here prices have stalled just below the cresting 40-week moving average line.
The weekly OBV line shows a slight new high, which is a divergence from the price action which shows a lower high. The MACD oscillator is in negative territory below the zero line and does not look ready for a cover shorts buy signal at this point.
In this Point and Figure chart of HSY, below, we can see the current decline with a column of O's. A downside price target has been met but further declines are possible.
Bottom-line strategy: In a former life when I covered the cocoa market as a reporter for Reuters the people in the chocolate industry always said that chocolate was an affordable luxury. Comfort food. Maybe with so many people around the world who are unemployed today we should rethink that idea. HSY is pointed down so let's stand aside and see what develops.
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