The price of Westlake Chemical (WLK) has basically been cut in half in the past 12 months. But is it more attractive now?
This short-term daily chart of WLK, above, shows the "hair cut" the stock has experienced. WLK is at a lower price point, but has this attracted buyers? Prices are still below the declining 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line is not encouraging and we cannot point to any bullish divergence between the lower lows in price and higher momentum readings. A bullish divergence from a momentum study would foreshadow a possible turnaround. Let's look at the bigger picture.
This longer-term weekly chart of WLK, above, is more encouraging. Here we can see a longer and deeper decline for WLK, but the rate of decline has been slowing. In the first big decline in 2014, the stock lost $45. In the second decline in 2015, the stock gave up $30 from $80 to $50. More recently, WLK only lost $20 as it fell to $40 from $60. The rate of decline has slowed and you can see the higher lows from the momentum study in the lower panel. This bullish divergence between lower price lows and higher momentum readings can foreshadow a turn to the upside. Timing can be loose, but the potential is there. For now, we'll keep our eye on WLK waiting for more improvement on the daily chart.