Don't Ignore This Chart!

Mondelez Takes Big Hit, But Remains in Bullish Triangle Pattern

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Mondelez International (MDLZ) had a rough week, tumbling over 5.5% after Kraft Heinz (KHC) made a bid for Unilever (UL).  That suggested to many investors that the likelihood of a MDLZ acquisition was significantly reduced and the stock was priced lower accordingly.  The technical pattern on MDLZ remains quite bullish, however, so I'd argue that last week's weakness is opening a door for entry.  There are two bullish possibilities here so let's look at the chart:

While last week's losses were obvious, the overall uptrend here is just as obvious.  Weekly RSI in the 40-50 range has generally been a solid entry point into MDLZ and we closed at 46 last week.  Furthermore, MDLZ is currently approaching its key trendline support within a bullish ascending triangle pattern.  I'd respect this trendline because failure to hold it could send MDLZ down to its early 2016 reaction low (black dotted line above).  A trip there could establish a test of price support within a bullish rectangular consolidation pattern.  Either way, MDLZ looks bullish to me in the longer-term.  It's just a question of whether the short-term produces additional weakness.  Last week, MDLZ printed a low of 41.30.  That level down to 40.00 would represent solid short-term entry with a closing stop beneath 40.00.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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