Procter & Gamble Co (PG) — This leading maker of household and personal care products does business in more than 180 countries. Stable demand for its products typically shields the company from downturns in the economy or geopolitical factors, but it does not protect it from the impact of negative foreign currency exchange.
S&P Capital IQ Equity Research estimates organic sales will increase 1% in fiscal 2016 (ending in June) thanks to price increases and a favorable product mix. However, due to an estimated negative 5.5% currency impact, reported sales are expected to decline 10%.
PG stock entered a bear market after falling from a high of $93.89 in late December.
Since then, rallies have been constrained by a major resistance line, which is now at a conjunction with the 200-day moving average at $48.80. A recent reversal occurred short of the line when upside volume failed to support the challenge and shares fell back to light support at the 20-day moving average.
Sell signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR), in June and July correctly predicted a sharp decline. Currently, the MACD indicator is negative.
Sell PG stock short at $75 with a price target of $66 for a potential gain of 12% by year end. A stop-loss order should be entered at $79.
Procter & Gamble pays a quarterly dividend of 66.3 cents (3.5% yield) with its next ex-dividend date expected in mid-January. If you hold shares short through that date, be aware that you will be required to pay the dividend to the owner of the stock.
