Procter & Gamble (PG) Tests Resistance After Strong Quarter

Dow component The Procter & Gamble Company (PG) is trading higher by about 1% in Wednesday's pre-market session after handily beating second quarter 2021 estimates and raising fiscal year revenue guidance. The household goods giant booked a profit of $1.64 per share during the quarter, $0.13 better than expectations, while revenue rose a healthy 8.3% year over year to $19.25 billion, more than $500 million above consensus.

Key Takeaways

  • Procter & Gamble beat second quarter 2021 top- and bottom-line estimates, sending the stock higher by 1%.
  • Quarterly revenue grew a healthy 8.3%.
  • Defensive stocks have fallen out of favor in recent months.
  • The stock could sell off into the mid-$120s in coming weeks.

The stock broke out to a new high in July, with strong revenue growth powered by socially distanced customers stocking their shelves with non-durable goods. The company's reputation as a safe haven attracted buyers as well, at least until November, when investors started to dump these issues and buy beaten-down recovery plays. Limited upside this morning suggests that the group is still out of favor, given exceptionally strong quarterly metrics.

Wall Street consensus on P&G stock stands at a "Moderate Buy" based upon eight "Buy" and four "Hold" recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $130 to a Street-high $169, while the stock will open the session more than $30 below the median $157 target. Weak sentiment is weighing on this poor placement, but defensive buying interest could return later this year.


A safe haven is an investment that is expected to retain or increase in value during times of market turbulence. Safe havens are sought by investors to limit their exposure to losses in the event of market downturns. However, the assets that are actually safe havens can vary depending on the particular down market. In order for an investment to act as a safe haven, investors must perform ample due diligence.

Procter & Gamble Monthly Chart (2007 – 2021)

Chart showing the share price performance of The Procter & Gamble Company (PG)

A multi-year recovery wave reached the 2007 high at $75.18 in 2013, triggering an immediate breakout that settled into a trading range between support at that level and resistance in the mid-$80s. An October 2014 rally to new highs failed in the first quarter of 2015, triggering a steep slide to a three-year low during the summer's mini "flash crash." The stock returned to resistance in the fourth quarter of 2016 but failed to break out after the presidential election.

A persistent decline starting in January 2018 carved the second higher low since 2012 in May, setting the stage for a powerful rally impulse that mounted 2015 resistance in January 2019. The stock posted exceptionally strong returns through the rest of the year and into February 2020, topping out at $128 and rolling over in a vertical downdraft that posted the third higher low in eight years in March.

A bounce into July completed a round trip into the February peak, setting off an immediate breakout that topped out in the mid-$140s in October. A November rally attempt failed, while downside into January 2021 completed a shallow double top breakdown when it undercut range support at $134.68. The stock is testing new resistance on Wednesday, with an opportunity to remount that level and improve the intermediate technical outlook.

The on-balance volume (OBV) accumulation-distribution indicator hit a new high in November and has now fallen to a four-month low. Unfortunately, both weekly and monthly stochastic oscillators have crossed into active sell cycles, raising the odds that bears will prevail right here despite strong quarterly results, potentially confirming a double top breakdown that exposes additional downside into July support near $128.


A flash crash is an event in electronic securities markets wherein the withdrawal of stock orders rapidly amplifies price declines. The result appears to be a rapid selloff of securities that can happen over a few minutes, resulting in dramatic declines.

The Bottom Line

Procter & Gamble stock is trading higher after a strong quarter, but growing technical headwinds suggest that the uptick will be short-lived. 

Disclosure: The author held no positions in the aforementioned securities at the time of publication.

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