With several weeks of rally under the market’s belt, it was susceptible to the disappointment doled out this week by central banks. To take advantage of the decline, I’m looking for sectors that lagged on the way up, as they tend to lead on the way down as well. While the S&P 500 rallied from its September lows nearly all the way back up to its 52-week highs, the chemicals group only recovered about two-thirds of its summertime losses. And it now looks ready to roll over. Within that group, PPG Industries (NYSE: PPG), a maker of protective… Read More
With several weeks of rally under the market’s belt, it was susceptible to the disappointment doled out this week by central banks. To take advantage of the decline, I’m looking for sectors that lagged on the way up, as they tend to lead on the way down as well. While the S&P 500 rallied from its September lows nearly all the way back up to its 52-week highs, the chemicals group only recovered about two-thirds of its summertime losses. And it now looks ready to roll over. Within that group, PPG Industries (NYSE: PPG), a maker of protective and decorative coatings and glass products, sports a rather clear chart with all the hallmarks of a stock ready to break down. First, there was declining volume and, therefore, declining investor interest on the price rally. Second, the chart shows a bearish divergence in the Relative Strength Index (RSI). Even though price made a higher high in November versus October, this momentum indicator made a lower high. This suggests waning momentum, and such divergences are usually resolved in the direction of the indicator — down in this case. But there is more. Cumulative or on-balance volume also… Read More