In today’s edition of the Daily Stock Report, we are going to take a look at Accenture PLC (ACN). Accenture fell to the red unfavored zone in the SIA S&P 500 Index Report back on April 1, 2024, at a price of $339.17. As we see in the relative strength matrix position chart, Accenture has stayed in the red unfavored zone up until today. The shares did rally back to the yellow neutral zone but did not re-enter our green favored zone only to succumb to relative strength pressure and fall right back into the red zone. As of yesterday’s close, the shares are at $303.80 which represents a 11.6% drop since April 1, 2024. This is another great example of staying away from investments in the red unfavored zone. Many advisors may instinctively look for names in the unfavored zone with the mentality that the shares are oversold and a “value buy” is in play. However, “value buys” may in fact be “value traps” and the shares may continue to fall further in price which is in fact what has occurred here. This reinforces SIA’s methodology not to pursue a “contrarian” mindset as names in the unfavored zone are not exhibiting any relative strength as the sellers are in control and not many market participants are looking at the name. The SIA Charts relative strength rankings help advisors identify stocks that are not just outperforming peers or index benchmarks, but in this case also underperforming peers or index benchmarks with such underperformance often signaling deteriorating investor expectations for company or sector growth. One may think a 11.6% loss in price is not too detrimental over the last year but with the S&P 500 Index returning a positive 7.4% return during this same time frame, this represents a 19% underperformance had you just invested in the broad US market instead (S&P 500 Index). Currently, ACN resides in the #410 spot in the SIA S&P 500 Index report. Let’s dive in and see what the candlestick chart looks like to see what may lie ahead for Accenture PLC. Since March of last year about the same time SIA issued its red unfavored rating, the shares trended sideways in a consolidation pattern between a high of about $390 at the top of this range to $280.00 at the bottom of this range. The shares are currently attempting to rally back towards the middle of this range with possible resistance at approximately $330 which is around the mid point of this sideways trading pattern. If the shares fail in its rally, support can be found once again at the bottom of the pattern in the $280 area.
In looking at the Point and Figure chart we see in the most recent trading action of the shares since the beginning the year a bull trap materialized where a column of X’s ended at the $393.92 level which was one box above the rising column of X’s back in March of 2024 when the shares reached a top of $386.20. Starting in March of this year the shares fell of a cliff with declining column of O’s lasting 17 O’s before finding its footing at the $281.32 level which is right where the green long term uptrend line is at. Currently the shares are trying to rally with its current rising column of 4 X’s. If the shares can continue to rally, upcoming resistance is at $329.62 where the shares bumped its head back in June of 2023. It they can break above this level; next resistance is at $349.79. If the rally fails to materialize further, support is at its 3 box reversal of $281.32 which is also where the long term uptrend is at. With an SMAX of only 3 out of a possible 10, ACN is not exhibiting much strength against the asset classes.
Accenture is a leading global IT-services firm that provides consulting, strategy, and technology and operational services. These services run the gamut from aiding enterprises with digital transformation to procurement services to software system integration. The company provides its IT offerings to a variety of sectors, including communications, media and technology, financial services, health and public services, consumer products, and resources. Accenture employs just under 500,000 people throughout 200 cities in 51 countries.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
