TheStreet's Quant Ratings service recently downgraded Citizens Financial Group (CFG) - Get Report to a "C Hold" from a "B- Buy" -- so naturally, I took a look at the charts and indicators. It looks like this downgrade could be just enough of a nudge to tip the stock's charts to the downside.
Let me show you what I mean. In this daily bar chart of CFG, we can see how prices have weakened since their late February/early March zenith:
Prices have made lower highs the past four months, and while they've held in the $33-$34 area over the past three months, that support might soon give way. It's true that prices are stuck between Citizens' nearly flat 50-day moving average (the gold-colored line at the top of the chart above) and its rising 200-day moving average line (denoted with a blue line). But in my opinion, a test and possible break of the 200-day line looks highly likely in the next few weeks.
After all, the daily On-Balance-Volume line (OBV) looks like it peaked in February with the stock's price and has been declining ever since. Remember, a declining OBV line happens when the volume of trading is heavier on days when a stock closes lower. A downtrending OBV line tells me that CFG sellers are more aggressive. The Moving Average Convergence Divergence (MACD) has also been crisscrossing the zero line and is now moving to a new "sell" signal.
In this weekly CFG bar chart, we can see that prices are above the rising 40-week moving average line -- but it looks like this line could be tested soon, too:
The weekly OBV line is flat, and on this time frame appears to be more neutral. The weekly MACD oscillator is in a "take profits" configuration above the zero line, but it could move below the zero line in the weeks ahead.
The bottom line -- a close below $33 for Citizens Bank will put the bear in control -- and tells us that Quant Ratings' downgrade of the stock was timely. Conversely, it will take a couple of closes above $38 on increased volume to bring the bull back.
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(This column originally appeared at 1:26 p.m. ET on June 27 on Real Money, our premium site for active traders. Click here to get great columns like this from Bruce Kamich, Jim Cramer and other writers even earlier in the trading day.)
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