Texas Instruments, Inc. (TXN) is trading lower today on moderate volume. How far down might this decline carry? We covered TXN in late December, and said, "Bottom line -- yes the trend is up and the signals from the indicators I have presented are not obvious sell signals, but I think TXN could suffer a profit taking reaction or a reversal in early January. My best advice is to protect your long positions."
With hindsight we can see that TXN did not turn down until the middle of January and about $15 higher. Let's check out some current charts to see if there is more downside risk on TXN.
In this daily bar chart of TXN, below, I can see that the share price of TXN is getting close to a test of the rising 50-day moving average line. Prices could touch like they did in early December and early September and rally from there or we could experience a deeper decline. The rising 200-day moving average line is well below the market and has not been tested since early July.
The On-Balance-Volume (OBV) line has been weakening the past two weeks or so signaling more aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator turned lower last month for a take profits sell signal.
In this weekly bar chart of TXN, below, we can see that the stock recently was $30 above the rising 40-week moving average line. This three-year history of TXN shows that $30 over the 40-week line is excessive or extended if you like that word better. The weekly OBV line has just turned down and the MACD oscillator has begun to narrow.
In this Point and Figure chart of TXN, below, a possible downside price target of $97.12 is shown. If TXN declined to the $97 area it would be a little more than halfway through a $100-$95 support area from the middle of October to early December.
Bottom line: Longer-term holders of TXN have a lot of profits built up and you can never know when or why investors might want to nail down those profits. It is a risk that you probably cannot quantify. I continue to recommend that longs protect their positions.