Annaly Capital Management (NLY) Always Drops At Least 2% When Th

2017년 6월 11일

Annaly Capital Management has been in a long bearish trend since 2008. On multiple occasions through this trend, three of the technical indicators discussed below are at similar or higher levels, than they are now. These instances have resulted in losses for the stock. I have laid out the reasons and levels to which the stock may drop while it most likely continues its long-term trend.

When we look at technical indicators, the relative strength index (RSI) is at 23.2053. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI slightly below the overbought mark.

The positive vortex indicator (VI) is at 1.3474 and the negative is at 0.6632. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The positive and negative values are currently at extreme levels and the stock always reverses course.

The stochastic oscillator K value is 90.9492 and D value is 91.4786. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic is currently overbought. The D value has just taken over the K value and the stock may begin to fall within two days.

In the history of this stock, it always slips a minimum of 2.09% when the RSI and positive VI are at or above their current levels. In addition to similar or more extreme RSI and VI levels, the stochastic was overbought in all studied instances, which is also the present case. 19 similar occurrences were studied. The median drop for the stock is 5.09% and the drop takes a median of 12 trading days to occur.

Considering the RSI, VI and stochastic levels, the overall direction favors a move to the downside. Based on historical movement compared to current levels and the current position, the stock could drop at least 2.5% over the next 29 trading days if not sooner.