Bristol-Myers Squibb Falls 1.06% as Four-Day Losing Streak Drags Shares Down 5.84% on Bearish Technicals

Bristol-Myers Squibb (BMY) has experienced a 1.06% decline in its most recent session, marking four consecutive days of losses with a total drawdown of 5.84%. This sustained bearish momentum, coupled with mixed signals from technical indicators, warrants a detailed analysis of price structure, momentum dynamics, and volatility patterns to assess potential near-term outcomes.

Candlestick Theory

The recent price action reveals a bearish bias, with a descending pattern forming over the past four days. A key support level appears to be consolidating around $44.66–$44.25, where the stock found temporary buying interest on October 3–7. A breakdown below this range could target the next major support at $43.25, identified as a prior trough on September 26. Resistance levels include the recent high of $45.91 (October 6) and the 50-day moving average (currently estimated at $45.80 based on historical data). A bearish engulfing pattern on October 2, where the price closed significantly below the prior session’s low, suggests continued downward pressure. However, the absence of a strong reversal candlestick (e.g., a hammer or bullish engulfing) implies the trend may persist unless a breakout above $45.91 occurs.

Moving Average Theory

Short-term and long-term moving averages confirm a bearish bias. The 50-day MA is likely above the current price, indicating a downtrend in the intermediate term. The 100-day and 200-day MAs are expected to be even higher, reinforcing a longer-term bearish structure. A crossover of the 50-day and 100-day MAs to the downside (if confirmed) would signal a potential acceleration in the decline. However, the 200-day MA’s position above the 100-day MA suggests the trend remains intact for now. Traders should monitor for a "death cross" (50-day MA crossing below the 200-day MA), which could amplify bearish sentiment.

MACD & KDJ Indicators

The MACD histogram has contracted, with the MACD line trending below the signal line, confirming bearish momentum. A potential bearish crossover (MACD line crossing below the signal line) could heighten the likelihood of further declines. The KDJ (Stochastic) oscillator shows %K and %D lines in oversold territory (<30), but the divergence between the oscillator and price action (i.e., %K failing to rise despite lower lows) suggests the oversold condition may not trigger a reversal. This divergence warns of a potential continuation of the downtrend rather than a rebound.

Bollinger Bands

Volatility has contracted recently, with the price trading near the lower Bollinger Band ($44.25–$44.66 range). This "squeeze" pattern historically precedes a breakout, but the direction remains uncertain. If the price breaks below the lower band, it could signal increased volatility and a deepening of the bearish phase. Conversely, a rebound above the middle band ($45.14) might indicate a temporary consolidation phase. The bands’ width has narrowed, suggesting a low-probability scenario for a sharp reversal.

Volume-Price Relationship

Volume patterns show inconsistency, with elevated volume on October 1 (a 5.17% rally) followed by lower-volume bearish sessions. This suggests that the recent downtrend lacks strong institutional selling pressure, which could limit the magnitude of further declines. However, the absence of a surge in volume during the recent selloff implies weak conviction among sellers, potentially leading to a shallow correction. Traders should watch for a spike in volume during a rebound, which could signal a short-covering rally.

Relative Strength Index (RSI)

The RSI is currently below 30, indicating an oversold condition. However, in a strong downtrend, the RSI can remain in oversold territory for extended periods without a reversal. A divergence between the RSI and price action (e.g., RSI failing to rise while the price makes new lows) strengthens the bearish case. A potential reversal would require the RSI to rise above 50 with increasing volume, but this is unlikely without a catalyst such as positive earnings or news.

Fibonacci Retracement

Key Fibonacci retracement levels from the recent high of $48.58 to the low of $44.25 are at 38.2% ($46.33), 50% ($46.41), and 61.8% ($46.49). These levels could act as dynamic resistance if the price attempts to rebound. A break above $46.49 would suggest a potential consolidation phase, while a failure to hold above these levels would reaffirm the bearish trend.

Backtest Hypothesis

The historical backtest of a strategy purchasing BMY when RSI falls below 30 and holding for five days shows underperformance relative to the benchmark. From 2022 to 2025, the strategy returned 5.29%, significantly lagging the benchmark’s 49.07%. The negative excess return (-43.79%) and low Sharpe ratio (0.13) indicate poor risk-adjusted returns, suggesting the oversold RSI strategy is ineffective for BMY in this context. This aligns with the current technical environment, where RSI remains in oversold territory without triggering a reversal. Investors should avoid relying solely on RSI signals for long entries, as the stock’s bearish trend appears entrenched.