Mondelez International Inc. (MDLZ) was downgraded today by the TheStreet's Quant Ratings service. In our last purely technical review of the shares, we said "MDLZ could hold around its December low of $40.50, but I don't see strong technical reasons that it will hold for long. Save your coupons for Oreos, and look to buy MDLZ at lower levels."
In the past two weeks MDLZ has tested the $40.50 level, which has held so far, but the indicators have not improved and this quantitative downgrade today has me re-examining the latest charts and indicators. Let's take a fresh look.
In this daily bar chart of MDLZ, above, we can see that the price pattern and the indicators are pointed down. Prices are below the declining 50-day and 200-day moving average lines. Prices have been testing the November/December lows and it looks like these lows can break. The daily On-Balance-Volume (OBV) line has been slowly working lower the past 12 months telling us that on balance the sellers of MDLZ have been more aggressive than the buyers.
In the lower panel of this chart is the 12-day momentum study and it does not show a bullish divergence. No foreshadowing of a possible rally.
In this weekly chart of MDLZ we can see that prices are below the 40-week moving average line and the slope of that line is now pointing down. The weekly OBV line has been weakening for the past three months. The weekly Moving Average Convergence Divergence (MACD) oscillator is below the zero line or in bearish territory.
In this Point and Figure chart of MDLZ, above, we can see that $40.18 is a key level. The chart shows a downside price target of $40.05. A break of the $40.18 lows could precipitate further selling.
Bottom line: A quantitative downgrade on top of a bearish chart. I would stay defensive on MDLZ looking for further declines to the $38-$36 area.
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(This article originally appeared at 2:26 p.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Jim Cramer and other writers even earlier in the trading day.)
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