Your Economy (No Politics)

[Bullwinkle]

Schaeffer on Charts: Vulnerable Mega-Caps
Bernie Schaeffer
4/5/2006 3:10 PM ET


The attached relative-strength charts of various mega-cap stocks versus the S&P 500 Index (SPX - 1,305.04) feature 37-month and 160-month moving averages. (The 37-month is equivalent to the 160-week, and I wanted to see both trendlines represented on a single chart).

None of these images is exactly pretty, but some do have the support of their 160-month trendlines. Note, however, the carnage that ensued in those cases where the 160-month was broken (e.g., Intel [INTC: sentiment, chart, options] and Pfizer [PFE: sentiment, chart, options] ). In that context, Tyco International (TYC: sentiment, chart, options) looks like an accident waiting to happen. And Citigroup (C: sentiment, chart, options) looks vulnerable down to its 160-month.

I think these charts generally support the argument that the mega-caps have limited upside (if the 160-month support holds) and significant downgrade (should 160-month support be broken).





















http://www.schaeffersresearch.com/commentary/bernie_observations.aspx?ID=15720