In a rising market, not all stocks perform well. Some show signs of weakness, even when the overall market is doing great. One key indicator to watch for is the “Death Cross,” which helps identify stocks that may underperform or decline.
What is the Death Cross?
The Death Cross happens when a stock’s short-term moving average, like the 50-Day Exponential Moving Average (DEMA), falls below the long-term 200DEMA. This signals a potential downturn in the stock’s price as selling pressure increases. Though many traders look for this on daily charts, it can be more accurate on weekly charts for long-term trends.
Here are three stocks showing the Death Cross on their weekly charts, signaling weakness even in a bullish market:
1. Vodafone Idea
Vodafone Idea, once a major player in telecom, has faced a lot of trouble in recent years. The stock first showed a Death Cross in March 2016, marking a long-term downtrend. Though the stock saw a bounce from ₹5.70 in 2023 to ₹19 in 2024, it seems like a temporary rise. A double-top pattern has also formed, reinforcing a bearish outlook. For long-term investors, Vodafone Idea remains a risky choice despite some signs of recovery.
2. Yes Bank
Yes Bank, once a top private lender, has been struggling due to bad loan management and regulatory issues. The stock has been in a long-term bearish trend since its Death Cross appeared. While there’s a chance of recovery with the 50WEMA starting to slope upward, it’s still too early to call a full reversal. For now, Yes Bank is a stock to avoid in a bullish market.
3. Bata India
Bata India, a well-known footwear brand, has long been considered a strong and reliable stock. However, recent technical signals have turned negative. A Death Cross on the weekly chart suggests the end of its bullish trend, with the stock showing a clear downtrend. Given these signs, Bata India may struggle in the current market, making it another stock to stay away from.
In conclusion, despite the overall positive market sentiment, Vodafone Idea, Yes Bank, and Bata India are all showing technical weakness. The Death Cross and other patterns suggest they may continue to underperform, so investors should proceed with caution.
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