Alliance Data Systems (ADS) Marked As Today's Roof Leaker Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Alliance Data Systems ( ADS) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Alliance Data Systems as such a stock due to the following factors:

  • ADS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $149.1 million.
  • ADS has traded 181,136 shares today.
  • ADS is trading at 1.59 times the normal volume for the stock at this time of day.
  • ADS crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on ADS:

Alliance Data Systems Corporation provides marketing and loyalty solutions in the United States, Canada, and other countries. ADS has a PE ratio of 32.4. Currently there are 12 analysts that rate Alliance Data Systems a buy, no analysts rate it a sell, and 5 rate it a hold.

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