Trade-Ideas LLC identified

Ally Financial

(

ALLY

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ally Financial as such a stock due to the following factors:

  • ALLY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $68.8 million.
  • ALLY has traded 715,228 shares today.
  • ALLY traded in a range 242.3% of the normal price range with a price range of $1.19.
  • ALLY traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ALLY:

TST Recommends

Ally Financial Inc. provides financial products and services primarily to automotive dealers and their customers in the United States. It offers dealer financial services, including a range of financial services and insurance products to automotive dealers and retail customers. Currently there are 10 analysts that rate Ally Financial a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Ally Financial has been 3.1 million shares per day over the past 30 days. Ally Financial has a market cap of $9.6 billion and is part of the financial sector and real estate industry. Shares are down 12.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ally Financial as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Consumer Finance industry. The net income has significantly decreased by 43.6% when compared to the same quarter one year ago, falling from $323.00 million to $182.00 million.
  • The debt-to-equity ratio is very high at 5.31 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Consumer Finance industry and the overall market, ALLY FINANCIAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of ALLY FINANCIAL INC has not done very well: it is down 7.35% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • ALLY FINANCIAL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ALLY FINANCIAL INC turned its bottom line around by earning $84.79 versus -$457.00 in the prior year. For the next year, the market is expecting a contraction of 97.6% in earnings ($2.03 versus $84.79).

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