Procter & Gamble (PG) Tests Resistance After Strong Quarter

Component Dow The Procter & Gamble Company (PG) is trading up around 1% in Wednesday’s premarket session after easily beating Q2 2021 estimates and boosting fiscal year revenue tips. The homewares giant posted earnings of $1.64 per share in the quarter, $0.13 better than expectations, while revenue rose 8.3% year-on-year. another to hit $19.25 billion, more than $500 million higher than consensus.

The stock hit a new high in July, with strong revenue growth fueled by socially distant customers filling their shelves with non-durable goods. The company’s reputation as refuge also attracted buyers, at least until November, when investors began to dump these issues and buy battered salvage coins. A limited rise this morning suggests the group is still out of favor, given unusually strong quarterly metrics.

The Wall Street consensus on P&G shares is a “moderate buy” based on eight “Buy” and four “Hold” recommendations. No analyst is recommending shareholders to close positions and move to the sidelines. Price targets currently range from a low of $130 to a high of $169, while the stock will open the session more than $30 below the midpoint target of $157. Weak sentiment weighs on this misplacement, but defensive buying interest could return later this year.

Procter & Gamble monthly chart (2007 – 2021)

A multi-year rally wave hit the 2007 high at $75.18 in 2013, triggering an immediate breakout that settled into a trading range between Support at this level and resistance in the middle of $80. An October 2014 rally to new highs failed in the first quarter of 2015, triggering a steep drop to a three-year low during the summer low”flash crash.” The stock returned to resistance in the fourth quarter of 2016 but failed to break after the presidential election.

A persistent decline from January 2018 dug into the second lowest since 2012 in May, setting the stage for a powerful rallying impulse that rose above 2015 resistance in January 2019. The stock posted exceptionally strong returns throughout of the year and through February 2020, peaking at $128 and rolling in a vertical downdraft that posted the third lowest in eight years in March.

A rebound in July completed a round trip into the February high, triggering an immediate breakout that peaked mid-$140 in October. An attempted November rally failed, while the decline in January 2021 completed a shallow double top breakdown when it broke above the range support at $134.68. The stock is testing new resistance on Wednesday, with an opportunity to move up that level and improve the intermediate technical outlook.

The balance volume (OBV) The accumulation-distribution indicator hit a new high in November and has now fallen to a four-month low. Unfortunately, both weekly and monthly stochastic oscillators have entered active selling cycles, increasing the odds that the bears will prevail here despite strong quarterly results, potentially confirming a double upper breakdown that exposes further decline at July support near $128.

The essential

Procter & Gamble shares are trading higher after a strong quarter, but growing technical headwinds suggest the upside will be short-lived.

Disclosure: The author held no position in the aforementioned titles at the time of publication.