Aircraft part maker Heico (HEI) is another name that's looking toxic right now. This $2.3 billion firm has been rallying hard in the last couple of quarters, climbing more than 23% higher in the last six months. But a bearish setup that triggered last week points to additional downside in this stock.
HEI triggered a sell on a head and shoulders top, a price pattern that indicates exhaustion among buyers. The head and shoulders is formed by two swing highs that top out around the same level (the shoulders), separated by a bigger peak called the head. The sell signal comes on the breakdown below the pattern's "neckline" level at $45. That level got tripped already -- and shares have been falling ever since.
There are a couple of saving graces for HEI. The first is that the head and shoulders pattern that spurred the selling in this stock is shallow, which gives it smaller trading implications. Another is the fact that HEI has a few decent support levels between current prices and the high $30 range. Those should arrest selling in shares sooner rather than later, but buyers would be well advised to wait for shares to actually catch a bid at support before trying to grab a bargain in this stock. Support may be nearby, but we're not there yet.
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