NETGEAR: A Break of $50 Turns the Charts Bearish

 | Feb 17, 2017 | 11:24 AM EST
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NETGEAR (NTGR) has struggled on the charts since late September. Prices have crossed above and below the 50-day moving average line several times and the 200-day moving average line has also been touched. Longs should keep a closer watch if the $52 to $50 area is broken.

In this one-year daily chart of NTGR, below, we can see that it rallied strongly from early 2016, but since late September the price action has turned sideways. Prices are moving in a tighter and tighter range -- the highs are lower and the lows are getting higher. You could call this tighter price action an equilateral triangle if you wish.

The On-Balance-Volume (OBV) line has moved sideways for much of the time since late September. The Moving Average Convergence Divergence (MACD) oscillator began to weaken in August and again in December. The MACD just moved below the zero line generating an outright sell signal.

In this three-year weekly chart of NTGR, above, we can see a long base pattern from 2014 into 2015 before an upside breakout and strong rally. In recent months, the price action has turned sideways and the rising, 40-week moving average line has been tested.

The weekly OBV line peaked in September and has moved lower, signaling increased selling. The weekly MACD oscillator crossed to a liquidate-longs sell signal at the beginning of October and is still pointed down.

Bottom line: NTGR has weakened on the charts, but it has not broken decisively. Longs should be aware that a break of the $52 to $50 area will give the bears the advantage.

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