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Financial Services Stock Susceptible to Further Downside on Fed Announcement - Altisource Portfolio Solutions (ASPS)

Posted by Gennady Kupershteyn on Sep 16, 2014 1:53:00 PM

Altisource Portfolio Solutions (ASPS) broke out of a cup and handle base the week of October 28, 2011 and advanced 550% to its peak the week of December 6, 2013. The company benefited tremendously from lower rates and quantitative easing. Now that the easy money era is coming to a close, institutions have been busy selling off the stock.

Despite continued strong quarterly/annual sales and earnings growth, significantly beating analyst's estimates for three straight quarters, and higher analyst revisions, the stock was down over 50% from its peak after breaking down below it bearish head and shoulder neckline the week of August 8, 2014, but rallied back in below average volume to test its fifty day moving average and bearish head and should neckline along with the market the last few weeks. Keep in mind, historically, big winners like Altisource Portfolio Solutions (ASPS), tend to sell off well ahead of any major signs of growth problems become obvious to the general public and even the majority of analysts.

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The stock can be shorted as it stalls at these levels and breaks below the neckline at around $97.44 in heavy volume, with protective stops initially just above $106. Conservative short sellers should wait to see how the stock reacts to tomorrow's Fed announcement before attempting a short position. Initial expected downside target would be $80 just below the fifty week low, and potentially as low $60 - 67, the next major support area.

Full Disclosure: No Current Position

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Topics: ASPS, US Stocks

 

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