And here’s another stock for the bears with some snap crackle and pop, but not just yet. So have a little patience with this one. Kellogg (NYSE:K) is now setting up for a possible short. The key level here is at $60 per share, where we can see a dramatic fall in volume on the volume point of control (VPOC) histogram, and as such, presenting very little meaningful support from a volume perspective. The volume here falls away dramatically as we move towards the mid-50s and down to $53 per share, where it trails away to virtually nothing on the weekly chart. However, first, we need to take out the potential support at the $60.50 per share level and denoted with the blue dashed line of the accumulation and distribution indicator, which has been tested and held four times in the past. Once this is breached, we have another level at $59, then a further one at $57, followed by further minor levels below.
Since August this stock has been attempting to rally at the $72/$73 per share level and failing on each occasion. This was followed in October by a sustained four-week rally, but note the falling volume confirming the move higher lacked both conviction and momentum with the stock then hitting the resistance just below the $68 per share area and denoted with the red dashed line of the accumulation and distribution indicator. A further rally in mid-November also ran out of steam, taking Kellogg down to the volume point of control (VPOC) at $63 per share.
So, to reiterate, patience is required, particularly as the platform of support at $60.50 has come to Kellogg’s rescue in both May and September. But, if this fails to hold this time, the trap door opens and we can expect to see a rapid move through the low volume area and down to $53 per share longer term.