Boston, MA 10/04/2013 (wallstreetpr) – HCP, Inc. (NYSE:HCP) (Closed: $39.82, Down: 4.67%) opened flat on Thursday but kept falling for the rest of the session hitting new lows all the way down. The price action broke the previous 7 day consolidation and created a very bearish long range candle. The volume surged at 9 million against an average of 3 million only.
The indicators are sending very bearish signals. The fall from the high of $56.06 made in May soon brought the weekly RSI down below the 50 level. In the last 3 years, this is the first time the RSI has totally failed to go above 50 and stayed below for such a long period, which is a bear market characteristic. The weekly MACD too is languishing in the negative territory and hitting new lows every week.
But the most dangerous signal comes from the daily RSI which is showing a Negative Reversal, totally different from Negative Divergence. When the price hit the swing high of $44.51 in September, the daily RSI made a higher high than the one made when the price had hit the high of $47.45 in July. That means, the momentum this time was higher but it still failed to take the price to make a higher high. That failure is called a Negative Reversal and has immense bearish implications.
In 2007 & 2008, the stock was rejected from the level of $42.11 – $42.16 and dropped to $14.26. It successfully breached this resistance zone in July 2012 and rallied to $56.06 but returned in August to the same level. Currently it is firmly trading below $46 which is the sign of a failed rally. It is also testing the lower boundary of the major channel that constitute the entire rally from the 2008 bottom of $14.26.
Investors could exit the stock totally if it sustains below $39.36, the Thursday low.
