Despite the market's recent bullish tide, a handful of stocks have managed to form alarmingly bearish chart patterns. In fact, Varian Semiconductor Equipment Associates Inc. (VSEA), Arris Group Inc. (ARRS), and Virgin Media, Inc. (VMED) have all triggered one of our two primary chart-based sell signals. Here's a closer technical review.
Though it doesn't show up on our weekly chart,
Varian Semiconductor Equipment Associates Inc. (
VSEA) made a significant bearish outside bar today, ending what has been a long string of gains.
Those gains also pushed the stock into a stochastically overbought position, which is one of the proprietary system's key conditions.
A revisit to the $24/$25 range for VSEA is very possible now that a breakdown effort has been initiated.
This system accurately spotted the previous major breakdown.
Like Varian,
Arris Group Inc. (
ARRS) shares posted a bearish outside day today as well, after stalling at the $13.20/$13.60 most of the week. Given the degree to which it was overbought, Arris now poses more downside risk than upside opportunity.
Our near-term target price range for said breakdown is $10.50 to $11.15.
Note that today's bearish outside reversal bar was made despite the fact that the company turned a profit in Q2 (18 cents per share), let alone a higher net profit (versus 6 cents last year). Strong selling on good news is a major red flag; most of earnings-based runup came in front of the news.
Virgin Media, Inc. (
VMED) actually peaked on Monday, but the downside follow-through over the course of the week has cemented this sell signal in place. The stock was overbought, plain and simple.
The $8.34 area has been support as well as resistance before, so that may be a good starting target price for a pullback.
Virgin Media isn't expected to turn a profit this year or next year.
