Bad Catsup Update

Bad Catsup Update

April 8, 2018 Off By Chuck

About 6 months ago I wrote a post about the potential decline in Kraft Heinz stock (KHC) titled Bad Catsup.  Here is what the chart of Kraft looked like at the time of the post.

bay area fee only independent retirement planning CFP wealth advisor - KHC.png

As you can see below, it is playing out as expected from the bearish rising wedge pattern as it has fallen by more than 20%. For those that shorted the stock on the break below the wedge, congratulations.  Don’t become complacent though, because the next few weeks/months may challenge your resolve. With price sitting below support level S2 and being very oversold (see RSI momentum in the upper pane), it would not surprise me to see a rally back up to the underside of S2 while the bears take a rest and the bulls try to take control driving prices higher. Any retest and failure to break higher is in line with the thesis of a much bigger decline ahead with S3 as a likely target, some 30% lower. A retest and hold above S2 is a signal that short-sellers should consider exiting the position and booking their profits.

San ramon fee only fiduciary financial planning retirement investment advisor CFP 4-9-18 KHC.png