While the pandemic affected many companies, The Clorox Company (NYSE: CLX) couldn’t have been placed in a better position to make profits. The company sells cleaning products and disinfecting wipes, two of our favorite safety items during the pandemic.
Source: Clay Banks & Peter Yost
However, the pandemic is all but over now and things are not looking as bright for CLX stock, which has been singing the same old song since August 2020 – downtrend.
Having risen by 44% from a range in March 2020 to an all-time high of $240, the stock has since sunk by close to $100 to its current price.
Support and Resistances
The Clorox stock finds itself in a precarious situation, having bowed below the $140 – $146 support level and now tests it as a resistance level.
If the price fails to orchestrate a breakout of this resistance level ($140 – $146), the next support level is over 20% below at $107 – $114.
Since the general market sentiment on Clorox stock is very negative, there’s no telling when the stock will recover from its 21-month downtrend.
Signals and Forecasts
The CLX stock rests on the base of the descending price channel it started in 2020. As a result, there could be a brief bullish pullback on the stock before it resumes its downtrend.
However, we do not expect a strong pullback, as the retest of the $140 – $146 resistance level could be all the pullback we’re going to see. Also, CLX has mostly stuck to the middle of the descending trendline since the beginning, which coincides with the resistance level to which the price is making a retracement.
Should You Buy Clorox Stock now?
For now and in the foreseeable future, steer clear of Clorox stock. There are many negative signals for the stock. And there doesn’t seem to be a light at the end of the CLX stock’s tunnel, with the price falling below the $140 – $146 support level.
To compound the problem, CLX’s PE ratio of 72, despite its massive fall, makes it more than twice overvalued compared to stocks in the US household products industry.
Until there are more positive signals for the Clorox Stock, we hold a bearish sentiment toward it.
