There is nothing worse for a stock than if it breaks a solid support or trend line.
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holding American Water Works ( AWK
) that was the case recently when the $130 level fell by the wayside.
The stock remains in a severe downtrend and is currently very oversold, which does not mean to buy it. In fact, AWK has not had an up session in days, investors preferring the safety of cash versus a nice dividend yield.
For the most part, AWK has been taking on water and that has been pushing the stock lower. We do see some potential support at the $109 level where we saw a minor bottom created in mid-May, which was actually a higher low from the Covid lows just a couple months prior. However, now we see the stock barreling through towards those levels, which could be about 35% lower than current prices.
The AWK chart, below, shows the goNOgo candles in the first frame are in purple, which tells us the chart is strongly bearish. Further, there is no true support below the $120 area until you hit the $109 zone, then below there much lower prices.
The other indicators shown -- Moving Average Convergence Divergence (second frame), the money flow indicator (third frame) and the traders dynamic index (fourth frame) -- all confirm the bearish condition and support the view that we are considering exiting the shares
as we discussed earlier.
Even the nice yield from the stock might not be attractive enough.