3 Reasons To Dump Hershey’s on Valentine’s Day
- Posted by Greg Harmon
- on February 14th, 2013
Hershey’s, $HSY, has had a great run higher going back through early 2011. But after going steady with it for over two years it is time to dump it this Valentine’s Day. Let me explain why. The chart below gives 3 solid indications that a short term top is in. And past history shows that when that happens it just mopes around for 3 to 4 months. Who wants to be with a moping stock for 3 months. First look at the price action. It has moved up a perfect $10 since the last base, coinciding with the Measured Move and is extended from the 50 day Simple Moving Average (SMA). Next, the
Relative Strength Index (RSI) is peaking over 70, into overbought territory. Yes it can continue to become much more overbought but history (the red hats on chart) for Hershey’s is that this level is about it. Finally the Moving Average Convergence Divergence (MACD) signal line has hit an extreme, where the last consolidation occurred with the histogram about to move to negative. You may be able to get another dollar out of this stock but its rhythm, its history, suggests that it is time to play the field for a while. Enjoy your freedom. It is Valentine’s Day, maybe you will get lucky.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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