Death cross: 20 stocks showing vicious bearish pattern

Published Tue, Mar 17 20157:00 AM EDTUpdated Tue, Mar 17 20159:58 AM EDT

There's a group of stocks in the S & P 500 that is trading in the feared "death cross," a phenomenon chart analysts use to determine bearish trends. A death cross occurs when the short-term trend of a security crosses below the long-term trend in a violent fashion. In this case, it's when the 50-day moving average crosses below the 200-day moving average. Many technical analysts see such moves as a change in momentum that will lead to steeper losses. About half of the S & P components are currently trading below their 50-day moving average. Within that group, the highest numbers of stocks belong to the utilities, energy and consumer discretionary sectors. From that list, CNBC Pro searched for the ones forming the death cross. Leading the list to the downside is Chesapeake Energy , deviating 26 percent from its 50-day moving average. Shares of the oil and natural gas producer got slammed due to the collapse in the energy complex since June of last year. Since first forming a death cross back in late September, the stock is down 41 percent. Technical analysts won't believe that downtrend is over until the 50-day moving average straightens out or begins pointing upward. Source: FactSet The fundamental analysts now agree with what the negative chart pattern told investors first. "Working capital surplus [for Chesapeake] could be gone by year-end" wrote Guggenheim in a research note to clients. "While liquidity enhancement is rare in the sector, we believe the working capital surplus will be consumed this year as the company outspends cash flow." On that note, Guggenheim slashed its net asset value estimate for CHK to $14 from $20, with a "neutral" rating. Read More Stock shrinkage: Sell Netflix on Seinfeld loss Other examples of stocks in the death cross include Wynn Resorts and the luxury retailer Michael Kors . Wynn, which derives about two-thirds of revenue from operations in Macau, is already down 36 percent since forming a death cross in late August. Source: FactSet "Our read is that there is the realization that WYNN's Macau EBITDA (cash flow) is unlikely to be much better than $1.1 billion in 2015 given lower VIP demand, a reduction in high margin non-casino revenues and a contraction in property margins," warned Nomura in a recent note. Policy changes in China, such as a smoking ban and stricter labor permits, could also put further pressure on revenue, the firm noted. Nomura rates the stock "neutral." Shares of Michael Kors are down 36 percent since hitting a record price of $101 on Feb. 25, 2014. The stock formed a death cross in early August, and since then, it has fallen 19 percent. Source: FactSet "Despite the compelling valuation multiples KORS now represents, we remain concerned with the trajectory of the U.S. business (comps decelerating, margins eroding)," noted Sterne Agee. The Money Play: With data from FactSet, CNBC screened for stocks in the S & P that have recently formed a death cross. The table below shows some of the companies that made the cut and how far they are trading in relation to their 50- and 200-day moving average.

Brendan McDermid | Reuters

There's a group of stocks in the S&P 500 that is trading in the feared "death cross," a phenomenon chart analysts use to determine bearish trends.