It’s been a day of mixed signals.
This morning, investors found out that the consumer confidence index (CCI) fell for the fourth straight month in a row. Dropping to 125.5, the CCI failed to meet economist estimates of 126.6, underpinning fears that consumers are beginning to wane.
Then, the U.S. Commerce Department announced that new home sales dropped 0.7% in October, weighed down by poor performance in the southern and northeastern United States.
But that doesn’t mean the housing market is weak. September’s sales numbers were revised as well, going from 701,000 to 738,000 homes sold. That’s the largest monthly figure observed since July 2007, meaning new home purchases hit a 12-year high.
And, when presented with both good and bad news, investors reacted accordingly.
The major indexes mostly traded “flat,” neither gaining nor losing in any significant way. As is typical near all-time highs, indecision has stricken both bulls and bears alike.
That’s not at all out of the ordinary, especially after the market has a huge day like it did Monday.
And during “pause” days, certain stocks will distinguish themselves as early movers. Sitting on the precipice of a setup, they’ll juke one way or another, priming the stock to move.
Today, People’s United Financial Inc. (NASDAQ: PBCT) did just that.
In the weekly candlestick chart above, you can see that PBCT broke out of the current trend last week. What’s not pictured is today’s move – a near 1% drop – that put PBCT into dangerous territory. The stock looked like it was rising, and now, appears as though it’s ready to tip over.
With last week’s candlestick closing below the four candlestick bodies prior, PBCT has some serious negative momentum pushing against it. A series of lower highs have been set, and about a month ago, PBCT bounced off resistance.
The stochastics remain somewhat high, suggesting that a downwards move is certainly possible, and PBCT is about to cross over the 50-week moving average.
A close below that moving average would all but confirm the trend reversal, meaning that it might make sense to go short slightly below it (at $16.02).
Of course, PBCT might continue heading north. If that’s the case, a breakout to the upside could occur.
But based on what the stock has done over the last month, it looks ready to drop down to the lower Bollinger Band, where short-term bears could collect a handsome profit.