Kraft-Heinz Joins the GE club

Last November we published an article titled, “GE’s recent stock collapse: Were there advance warnings?” To read the article please click here. In the article we illustrated 3 specific phases of distribution that suggested the majority of investors in the stock were sellers – not buyers. When the sellers outnumber the buyers over time the primary trend turns negative and the stock price tends to decline.

Today, Kraft-Heinz has joined the GE club having fallen in price by over 20% since its Phase 2: FAILURE late last summer. Please refer to the chart below courtesy of StockCharts.com.

We call the three phases of distribution WARNING, FAILURE, and CONFIRMATION. As you can see from the chart above, the price of Kraft stock has not recovered since dropping below the Blue Line last summer.

We believe investors who own or owned this stock could have limited their losses by following a sell process. If you do not have a sell process and would like to learn more about ours, please click here.

We believe using a tested and proven sell process may help you prevent or minimize significant financial losses the next time the primary trend of the US stock market turns negative. Until then, who will be the next company to join the GE club?

Thanks for reading.

Jeff Link

Disclaimers:

¹ Blue Line Investing (BLI) is an alternative to traditional wealth management. BLI uses a disciplined, rules-based investment process to seek investment opportunities, regardless of whether financial markets are rising or falling. Based on technical analysis research, the process applies trend-following using specific Exponential Moving Averages (EMAs) of the market along with other technical indicators. A moving average is a widely used indicator in technical analysis that helps smooth out past price action by filtering out the “noise” from random price fluctuations. EMA’s can be calculated for any time period. Some examples include the 5 day EMA; 50 day EMA; and 150 day EMA. We have attempted to simplify this by calling the various EMAs we use in our process the “Blue”, “Purple” and “Green” lines.

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volumes. Technical analysis attempts to predict a future stock price or direction based on market trends. The assumption is that the market follows discernible patterns and if these patterns can be identified then a prediction can be made. The risk is that markets may not always follow patterns. There are certain limitations to technical analysis research, such as the calculation results being impacted by changes in security price during periods of market volatility. Technical analysis is one of many indicators that may be used to analyze market data for investing purposes and should not be considered a guaranteed prediction of market activity. The opinions expressed are those of Blue Line Investing. The opinions referenced are as of the date of publication and are subject to change without notice. Blue Line Investing reserves the right to modify its current investment strategies based on changing market dynamics or client needs.

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