Intuit (INTU) Flashes Two High-Volume Sell Signals / A penetration of the 50-day moving average could result in a breakdown

Sam Collins for InvestorPlace.com writes: This company develops and markets small business and personal accounting and tax preparation software. On Aug. 22, S&P Capital IQ downgraded the stock from “buy” to “hold.” It also lowered its earnings forecast for fiscal 2015 (ended in July) to $2.48 from $3.58, and for fiscal 2016 to $3.61 from $4.45. This reflects the shift from desktop software to cloud-based subscriptions. Last month, the company reported a quarterly loss of $0.01 versus an expected profit of $0.07.

My propriety indicator, the Collins-Bollinger Reversal (CBR), flashed a double, high-volume sell signal in the past two weeks. The CBR system is shown by heavy white dots for high-volume signals and small yellow dots for low-volume signals. The volume indicator is triggered if the signal is accompanied by at least 30% higher volume as compared to six months of past volume.

In order for the system to confirm, it must be backed by other systems. For example, in the INTU chart, the recent CBR signals are confirmed by MACD turning lower, and momentum also turned down (not shown).

Sell INTU if you own it. Traders could sell shares short at $83 or higher with a target of $76. The penetration of the 50-day moving average at $81.61 could result in a breakdown and a quick move to my target.

Short selling is a speculative technique that is not suitable for all investors. Check with your broker for the ability to borrow shares and any special requirements associated with this type of speculation. And always use stop-loss orders when short selling since a move higher could result in a large loss.