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Avon calling

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This morning on Premier Markets' Hotlist we mentioned Avon Products (NYSE:AVP) as a possible short candidate. Lets take a look at some charts to see what we're talking about.

Avon Products Weekly and Daily Charts

The weekly chart for Avon shows a nice double top forming. A break below 38 on heavy volume would confirm the pattern. The long-term downside price projection is 26 (bottom of the pattern - the height of the pattern. 38-12 = 26). This projection correlates well with the January 2000 low of 25.50. The daily chart zooms in to show what is going on. Prices are consolidating at the bottom of the pattern, and volume (not shown) is drying up. With the 50-day moving average falling, it should push prices below 38 in the coming days/hours.

Avon Products Point and Figure Chart - 1 Box

The triple bottom sell signal on the point and figure chart also suggests Avon will go lower. Using the column of O's that gave the original sell signal, we have a bearish price objective of 28. This was calculated by taking the number of O's in the original sell signal column, multiplying by two, and then multiplying times the box size (10 * 2 * 1 = 20). This number was then subtracted from the highest point in the column (48 -20 =28). There is a $2 difference in the double top projection and the point and figure projection, but ours is not an exact science. This gives us a range of $28 -$26 for prices to eventually fall to.

Jeffrey Canavan
Assistant Analyst

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