• From the chart, Kraft appears to have formed a bearish flag pattern. It also closed below its 30-day SMA on volume. A break below the US$21.92 support could see the stock tumble back to retest the March low of US$20.81 next.
• Technical indicators continue to show signs of weakness, supporting the bearish view. The MACD is about to confirm its dead cross.
• Any rebound towards the US$23.49-23.98 resistance levels should be seen as an opportunity to sell.
Johnson & Johnson (JNJ US; US$51.41) – SELL
• J&J has rebounded from a low of US$46.25 to current levels. The stock now needs to stay above its 30-day SMA at US$50.68 for a retest of the strong resistance at US$55.00-56.00. Otherwise, increased selling pressure could kick in with the next support at US$48.96 and US$46.25.
• Indicators are still marginally positive but losing momentum. Its MACD is about to confirm its negative crossover.
• There is a strong possibility that the stock may rebound a tad more but could the find the US$55-56 resistance levels difficult to break. Investors who got in earlier may want to unload close to those levels.
Wal-Mart Stores Inc (WMT US; US$50.66) – SELL
• Wal-Mart briefly broke out above its medium term resistance trend line but the bulls could not sustain the buying momentum. It fell back below the breakout level with a huge gap down. It has formed a reversal pattern called island reversal.
• Both its longer and shorter term indicators are starting to decline again, suggesting that there is more downside from here. Its MACD has just confirmed its dead cross while its RSI has fallen below its support, signalling that selling momentum is picking up.
• Sell on any upticks. Resistance is seen at US$52.22-52.66 while support is weaker at US$49.58 and US$47.95. A break below US$46.25 is very bearish for the stock.
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