NEW YORK (TheStreet) - The popping of a stock-specific bubble occurs when a stock sets an all-time or multiyear high then quickly falls below its 200-day simple moving average. If the underpinnings of the stock market are healthy this should not happen!
This is the story for all six of the stocks profiled today. All have been chopped to the earnings woodshed after reporting quarterly results.
When companies from several different sectors and industries take sharp share price slashing, there's an economic story to tell. You have the largest on-line retailer, a major homebuilder, the largest fast food burger chain, the largest package delivery company, an international conglomerate of products such as elevators, air conditioners, aircraft engines and helicopters, plus the parent of Taco Bell, KFC and Pizza Hut.
Technically all six companies are trading below their 21-day, 50-day and 200-day simple moving averages and below their five-week modified moving averages with declining 12x3x3 weekly slow stochastics. All six stocks are above their 200-week simple moving averages, which is the longer-term reversion to the mean.
Let's take a look at the stock profiles.
Amazon.com (AMZN - Get Report) ($312.99) set an all-time intraday high at $408.06 on Jan. 22 then corrected to as low as $284.38 on May 9 as this bubble popped. The stock was below its 200-day simple moving average between April 3 and July 11. The bubble was re-inflating going into its earnings report on July 24 trading that day as high as $364.85. The stock plunged on a negative earnings report below its 200-day SMA at $349.76 trading as low as $305.30 as of 12:45 p.m. today.
The weekly chart is negative with its five-week modified moving average at $328.76 and its 200-week simple moving average at $250.49. Monthly and annual value levels are $279.94 and $259.67, respectively, with an annual pivot at $334.95 and quarterly and semiannual risky levels at $385.43 and $419.21, respectively.
D R Horton (DHI) ($20.70) set its 2014 intraday high at $25.23 on July 2 then closed at its 200-day SMA at $21.93 on July 24. The company reported quarterly results before the opening bell on July 24 and missed analysts' earnings per share estimates by 17%. The stock subsequently broke below its 200-day on July 25 trading as low as $20.31 as of 12:45 p.m. on Friday.
The weekly chart is negative with its five-week MMA at $22.81 and its 200-week SMA at $17.37. Semiannual and monthly risky levels are $23.01 and $25.41, respectively.
McDonalds (MCD) ($175.26) set an all-time intraday high at $103.78 on May 14 and closed below its 200-day SMA at $100.15 on July 21. The company missed analysts EPS estimates by 3 cents before the opening bell on July 22. The stock was already below its 200-day SMA sot the sellers piled on pushing the stock as low as $94.20 as of 12:45 p.m. on Friday.
The weekly chart is negative with its five-week MMA at $98.62 and its 200-week SMA at $91.55. Monthly and annual risky levels are $97.93 and $99.30, respectively.