Don't Ignore This Chart!

Momentum Turns Down on Deere

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Deere (DE) is not keeping pace with broader market and a bearish momentum signal just triggered. Deere was hit with the rest of the stock market in August and fell sharply. This was normal because the broad market was under intense selling pressure. The S&P 500 ultimately held its August low in late September and surged in October, but Deer broke its August low and the October bounce stalled out after the first week. The stock is clearly not keeping pace with the broader market and this is reflected in the price relative (DE:$SPX ratio), which hit a new low this week. A new low in the price relative means DE shows some serious relative weakness. 


On the price chart, Deere peaked in early October and formed lower highs below 82. There was no follow through to the early October surge and DE did not move up with the S&P 500. In lower indicator window, MACD moved below its signal line and back into negative territory over the last two days. A negative MACD means the 12-day EMA moved below the 26-day EMA. The move below the signal line suggests that the 12-day EMA is falling faster than the 26-day EMA and downside momentum is accelerating. 
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--Arthur Hill CMT

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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