Trade of the Day: Rent-A-Center Inc (NASDAQ:RCII)

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Rent-A-Center Inc (NASDAQ:RCII) operates 2,800 stores in North America, offering durable products like computers, smartphones and other electronics, plus appliances and furniture. It has a rent-to-own business model; if you make all the payments, you own the product, but there’s no obligation.

RCII has been struggling for a couple of years now, and on June 13, the stock completed a Descending Continuation Triangle. With this confirmation, the Profit Scanner powered by Recognia now sees a new downtrend in store — one with 31%–37% further downside.

Essentially, the pattern suggests that sellers are more aggressive than buyers. Previously, buyers had shown a strong appetite for the stock at a certain price — shown at the lower flat line — but when supply ran low, the stock quickly broke down. Now that RCII has violated the bottom boundary line, we can expect bears to take it significantly lower, to the $7.50–$8.30 area.

Trade of the Day: Rent-A-Center Inc (NASDAQ:RCII)

This particular event took 78 trading days, making this an intermediate-term signal. But there are clues that it might not take that long for bears to make a nice profit.

On June 9, the stock crossed below its 21-day moving average, suggesting near-term weakness. Late last week, there were five other short-term bearish signals…namely, from the Commodity Channel Index, Williams %R, the Slow AND Fast Stochastic, and the Momentum indicator.

Then, on June 13, the MACD turned short-term bearish as well. And on June 14, there was a bearish Triple Moving Average Crossover involving three short-term averages: the 4-day, 9-day and 18-day moving averages.

Add it all up, and things aren’t looking too good for Rent-A-Center bulls…but it’s prime time for a bearish trade.

Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.

Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.


Article printed from InvestorPlace Media, https://investorplace.com/2016/06/trade-of-the-day-rent-a-center-inc-nasdaq-rcii/.

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