Zoetis Inc. (ZTS) stock could face pressure as momentum appears to be fading, signaling potential downside risk in the coming weeks. With earnings set for Monday, any result short of positive could lead investors to shift towards defensive sectors for the remainder of 2024. Zoetis closed yesterday at $178.69 per share, currently down over 8% year-to-date, although it’s up 10% over the last 12 months. This mixed performance may test investor patience as we approach year-end.

Resistance and Upside Potential

Zoetis recently encountered resistance around $199.84, failing to break higher and experiencing a 5.69% sell-off last week. For a potential rally, Zoetis would need to break above the $199.84 level, which could set the stage for a year-end push toward $210 or the upper trendline resistance in its trading channel.

Downside Risk: Key Support Levels to Watch

Technical indicators are pointing towards increased downside risk for Zoetis. Initial support is at $172.33, with a further support level around $166.14. A break below $166.14 would likely turn traders' focus to the lower trendline support at $157, signaling a more significant shift in market sentiment.

Technical Indicators Show Bearish Signs

The MACD (Moving Average Convergence Divergence) has now turned bearish, reflecting weakening momentum, while the RSI (Relative Strength Index) has dropped to 46 from a previous high of 65, nearing a bearish zone. These indicators suggest a potential for increased selling pressure unless earnings results surprise to the upside.

Summary

With Zoetis’ earnings report approaching, the stock is at a crucial juncture, with resistance at $199.84 and support levels at $172.33, $166.14, and $157 in focus. A strong earnings report could reignite a rally, but any disappointing results may push the stock into a bearish trend, particularly with technical indicators showing waning momentum.