Tuesday, August 30, 2016

HLF Herbalife Weekly Chart

The baby battle between activist investors Akman and Icahn continues with Herbalife used as the field of play. Ackman is massively short HLF while Icahn just bot more stock on the long side and says he is in at around 59 on an average basis. Who will win this battle of the babies?

The chart favors the short side. Price had tagged the upper standard deviation band and traveled back to the middle band at 61.81. The indicators are staggering sideways not tipping their hands. The red lines show negative divergence which created the two spankdowns over the last few months (red arrows). At the price peak one month ago, the RSI and MACD lines are long and strong in the March to July time frame hinting at the possibility of another matching or higher high. Longer term weakness appears embedded.

The red rising wedge is an ominous bearish pattern. The collapses from rising wedges can be quite dramatic. Price has come down this week and is sitting on the lower red trend line. If price ventures lower it will likely target the lower standard deviation band at 55.56. However, the forecast would be that prices float higher inside the apex area of that wedge, perhaps for a week or three, and this will be the peak in HLF and it will then roll over to the downside. The 65-70 area may be an attractive place to short from. Keystone does not hold HLF and probably will not trade it. As long as the indicators remain negatively diverged if price comes up for the matching high, then HLF should sell off going forward for the weeks ahead.

It looks like baby Ackman will come up the winner in the months ahead versus baby Icahn. Icahn likely placed a bad trade by buying more shares on the long side to prove a point over the last few days. If price comes up, or even at these levels since Icahn's entry is averaging around 59, he would be wise to likely start distributing his shares each day forward and exit his long position before price fails through the lower red trend line and the rising wedge sends price dramatically and quickly lower. It would not be surprising to see price down at the 200-week MA at 52.67, say, in September-November. Price is stumbling sideways over the last few months so the baby activist investors keep slapping each other's faces. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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