Second Chance to Ditch This Chemical Stock

Recent bounce gives traders another opportunity to sell or short Celanese

   
Second Chance to Ditch This Chemical Stock

Celanese Corp. (NYSE:CE) — This producer of industrial chemicals, engineered plastics and acetate fibers was on our list of Stocks to Sell in June.

With the stock trading at just over $37, we had a downside target of $33. It subsequently declined to under $33, but has since rallied with the market and again appears to provide an excellent short-sale opportunity.

Because of its international nature, it could be highly sensitive to a global recession. Higher-than-expected raw material costs add to its risk. And soft European markets impacted Q2 results, which came in at $1.47 versus analysts’ estimates of $1.55. Sales fell 4% due to weakness in Europe.

The stock is in a long-term downtrend, and the recent bounce puts it squarely in a sell zone at $39 to $41. Its near-term target is $33, but it could break the rounding bottom and head lower. Note the overbought stochastic and the falling accumulation.

Sell or short CE at the market. As with all short sales, check with your broker for special requirements. Short-selling is a highly speculative technique, so protect the position with a stop-loss order.

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Article printed from InvestorPlace Media, http://investorplace.com/2012/08/trade-of-the-day-celanese-corp-nyse-ce-2/.

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