A group of stocks is about to form a chart pattern that shows investors are bearish: the worrisome death cross. The death cross consists of a price chart pattern that occurs when a stock’s 50-day moving average falls below its 200-day moving average. This could be a sign that momentum is waning, or that investor sentiment toward a particular stock is deteriorating. Additionally, the death cross has also been touted as a predictor of an upcoming bear market pattern. CNBC used FactSet data to sift through stocks approaching death crosses and found four names, including fast-food giant McDonald’s and athleisure brand Lululemon. McDonald’s is sending out the death cross again. Shares are down 10% in 2024, but analysts surveyed by FactSet remain optimistic, with 67% giving it a buy or overweight rating. The average analyst price target expects the stock to rise 21% going forward. McDonald’s has been under pressure in 2024 as tensions in the Middle East impacted its fourth-quarter results. The company said earlier this month it would buy all of its franchises in Israel from local licensee Alonyal Ltd. Deutsche Bank analyst Lauren Silberman said sentiment toward McDonald’s had soured somewhat ahead of quarterly results later this month. However, she said concerns about “global strength and value leadership” were overblown and she believed “the brand is well positioned to lead over time, particularly in a more challenging consumer context.” The Analysts also praised the company’s positioning as a defensive stock in a more challenging macroeconomic environment and highlighted its favorable risk-reward ratio. Lululemon is also approaching a death cross chart pattern. The sportswear retailer’s shares have plunged nearly 34% in 2024, but analyst sentiment remains high. Nearly 70% of respondents to a FactSet survey maintain a buy or overweight rating on Lululemon stock, and their average price target implies a future upside of about 39%. Shares have struggled in recent months, supported by slowing U.S. sales and weak demand after the company issued soft guidance in March. Oppenheimer said: “While new uncertainties hang over LULU, the brand’s underlying growth drivers appear to be intact, and improvements in innovation and marketing should contribute to at least some sales expansion in the short term, and the stock Valuations are approaching all-time lows. Other stocks flashing death cross signals include telecom-focused real estate investment trusts Crown Castle and American Tower, as well as healthcare technology company Teleflex — CNBC’s Nick Wells contributed to this report.
