Charts of CROCS, Inovio Biomedical, and American Axle & Manufacturing Holdings are all waving bearish red flags.
Despite the market's apparent non-stop strength, a handful of stocks still seem to be struggling. In fact, some of them may even be on the verge of melting down... at least in the short run. The prime breakdown candidates we see at this time are American Axle & Manufacturing Holdings Inc. (NYSE:AXL), CROCS Inc. (NASDAQ:CROX), and Inovio Biomedical Corporation (NYSEMKT:INO). A closer inspection of each chart is merited.
In the interest of painting a complete picture, yes, this is the same American Axle & Manufacturing Holdings Inc. (AXL) the Small Cap Network went bullish on back on July 28th when AXL was trading at $1.28 per share. It was also the same American Axle & Manufacturing the website recommended taking at least partial profits on back on August 18th when the stock was trading at $5.70 (a 346% move).
Though AXL went on to reach a high of $7.11 the next day, the last couple of days have been pretty bearish... lower opens, and even lower closes. That's often the result of a runaway rally.
Part of the pullback may have been prompted by a Fitch rating for American Axle & Manufacturing Holdings that was better than it has been, but still not great. The rating agency says American Axle is 'stable', assigning it a rating of CCC.
Regardless, AXL shares were over-extended, and could slide all the way back to $4.00, or all the way top $2.00 in a worst-case scenario; both were previously support or resistance lines.
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CROCS Inc. (CROX) is no stranger to being over-extended, and even continuing to rally while overbought. However, Friday's and today's bars are a red flag that enough is enough already for the footwear maker's stock.
Yes, CROX is up today by about 2.5%. However, shares have had trouble hanging onto their intra-day highs... as we also saw on Friday. Those opens and closes at the lower end of the range effectively make what are called gravestone dojis, which when they occur after a long rally can indicate that the buyers are almost running on empty.
And, the fact that CROCS Inc. trading volume faded even as stocks continued to rise after a high volume thrust was seen three weeks ago further suggests the trend is running on fumes.
The kiss of death may be the Motley Fool's classification of CROCS Inc. as one of the 'Best Stocks for the Next Four Years'. ... a contrarian clue that everyone who wanted into a trade has already gotten in.
As for a downside target, the gap from earlier in the month was also a ceiling back in June, and close to May's high as well. So, let's just say CROX could tumble all the way down to the $4.25-$4.50 zone.
Another stock contending with a big chart gap is Inovio Biomedical Corporation (INO). On July 29th, INO jumped from $0.74 to an open of $1.96, and pressed on to close that day at $3.18. It's been nothing but downhill ever since for the stock.
So what gives? Inovio's swine flu/H1N1 vaccine was shown to be 100% effective at preventing the spread of the disease when used on animal test subjects, per the press release from July 29th (which was clearly the reason for INO's boost).
Good news indeed, but as the euphoria wore off, questions arose about how to monetize the technology.... questions the company has yet to answer. Until Inovio does explain those details, it's just another swine flu player - one of dozens.
Even the August 10th follow-up announcement that Inovio will jointly develop universal influenza vaccines (including swine flu) with the National Institutes of Health's (NIH) research unit didn't really tell investors anything concrete.
Though volume has been light as Inovio Biomedical shares have faded, the bulls have never put up a real fight either. And, the last four days is the second set of four-day periods of consecutively lower closes we've seen since the peak at $3.18 was made. Factor in how support between $2.02/$2.05 was broken today, the downside move seems very likely.
A target level of $0.79 may be merited, which would mean the gap has been fully closed.
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