Gun Stocks Are Falling

| About: American Outdoor (AOBC)
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Today one of the sectors that seems to be taking a nosedive is the firearms sector lead by Smith & Wesson (SWHC) and Sturm Ruger (NYSE:RGR). Since the Obama re-election is over, both of these stocks have taken a nosedive. In this chart provided by Barchart you can see the recent price action of both stocks against the overall market and represented by the Value Line Index:

Barchart technical indicators:

Smith & Wesson

  • 40% Barchart short-term technical sell signal
  • Trend Spotter hold signal
  • Below its 20, 50 and 100 day moving averages
  • 7.90% loss in the last month
  • 8.87% loss in the last quarter
  • 16.00% below its 1 year high
  • Relative Strength Index 41.58%
  • Recently traded at 9.44 with a 50 day moving average of 10.10

Sturm Ruger

  • 40% Barchart short term sell signal
  • Trend Spotter sell signal
  • Below its 20 and 50 day moving averages but still above its 100 day moving average
  • 2.69% loss in the last month
  • Flat for the last quarter
  • 20.15% below its 1 year high
  • Relative Strength Index 39.82%
  • Recently traded at 48.10 with a 50 day moving average of 49.32


Smith & Wesson

  • 4 Wall Street brokerage firms have assigned 6 analysts to monitor the numbers
  • Revenue is projected to increase by 35.2% this year and another 2.80% next year
  • Earnings are estimated to increase by 148.00% this year, but decline by 10.80% next year and increase annually by 22.00% over the next 5 years
  • Analysts have released 2 strong buy, 3 buy and a hold recommendation to their clients

Sturm Ruger

  • Although analysts have not come up with good consensus figures of revenue and earnings they have made recommendations
  • They have issued 1 strong buy, 1 buy and 1 underperform recommendation to their clients.

Conclusion: Both stocks are not buys at this time. Legislative uncertainty plus weak forward projections show weakness in the long term. Speculative players should monitor the moving averages and turtle channels to determine entry and exit points:

Smith & Wesson:

Sturm Ruger:

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.