SSW - Staying away.

Graeme takes a deep dive into Sibayne Stilwater

SSW - Staying away.

I warned about SSW in August 2021, and the share fell right back, as expected. Since then, however, it put up a spectacular recovery. There have now, however, been several warning signals, indicating the potential for further downside ahead:

First we saw an inverse cup-and-handle pattern, targeting 4973, which was reached today (chart above). Then came a small head-and-shoulder pattern which targets around 3800. The neckline is broken (see below).

Next we saw a breach of the descending 200ma at (c), followed by the breakdown of the Medium trend-line, MT, at (a), which sets up a "top" with a floor along support level (b-b). Add to that the formation of another over-arching head-and-shoulder pattern, with a now-broken neckline, which sets up an even lower target at around 3200.

If we look (speculatively) ahead and make the assumption that line (b-b), the floor, will indeed provide a level of support, then that opens the way to the real possibility that we (may) see a further bounce off that line to form a right shoulder. Should the floor level break, then that would constitute a neckline break as well, setting up a target very close to the LT trend-line.

Of course, this may not play out as sketched out above, but for me, I would rather watch from the sidelines until I see it play out differently.