"Narrow
gates admit few."
-- Christina Nikolov
Sinkhole Ahead?
by
Christina Nikolov, Founder ChartWatchCentral
Stock/Ticker: Centerpoint Properties (CNT)
Date: May 7, 2003
Opinion: Bearish
Current Price: $59.20
Target Price: Initally to $54.69
Commentary:
Over the past year, Centerpoint Properties (CNT) failed to hurdle it's June 2002 peak by a decisive margin on five occasions. Here's why we expect the sixth attempt to fail as well.Since mid-March, CNT traced out an almost perfect head and shoulders top. (chart #1) Resistance can be found at the top of the head and shoulders pattern's left shoulder, a downside gap created on April 24th, and the top of the formation's head. Those levels are $59.25, $59.60 and $60.47, respectively. Support can be found at the pattern's neckline, which currently resides at $57.76. If the neckline is undercut, we see some additional support at $56.50, $55.70, $55.00 and $53.50. Our downside target for this pattern is $54.69.
Adding to our concern are two 'doji' which formed on the monthly chart, right at the December 2002 and April 2003 peaks. In our opinion, these doji indicate that the bulls could be losing their grip on the shares. (chart #3)
Want more? Over the past ten months, CNT's Chief Financial Officer and President have been exercising options at substantially lower prices and selling the shares on the open market. This may or may not be significant, but is definitely worth monitoring.
At 35 times earnings, CNT's shares are twice as expensive are the average stock within the S&P500 Index. Meanwhile, CNT's full-year 2003 earnings are slated to plunge 25%, compared to a 9.5% jump for the S&P500.
The company does not have listed options, so you can only profit from a decline by shorting the shares. As of the middle of April, short interest was 1,134,486, or approximately 5% of the float.
Chart(s):
#1) Centerpoint Properties (CNT) Three Month Daily Chart
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#2) Centerpoint Properties (CNT) Four Year Weekly Chart
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#3) Centerpoint Properties (CNT) Seven Year Monthly Chart
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