The charts of Action Alerts PLUS holding Snap-on (SNA) have reached a juncture point. Prices bounced off the rising 200-day moving average line but the On-Balance-Volume (OBV) line is still pointed down, suggesting that sellers of SNA are more aggressive. There should be some chart support in the $165-$160 area but we don't want to jump the gun on buying. Patience.
In this daily bar chart of SNA, below, we can see that prices made an upside breakout in late November when they cleared the $165 level. Prices rallied into the end of January with a peak above $180 before retreating back to the breakout level of $165. SNA is currently below the declining 50-day moving average line but above the rising 200-day moving average line.
The daily On-Balance-Volume (OBV) line peaked with prices at the end of January and has declined the past two months, suggesting that sellers are more aggressive than buyers. In the lower panel is the 12-day momentum study, which shows higher lows in February and March compared to lower lows in the price chart for a bullish divergence. The pace of the decline the past two months has slowed as it approached support.
In this weekly chart of SNA, below, we can see the price action going back three years. Prices broke above the 2015/16 highs in December but were unable to sustain those gains. SNA is still above the rising 40-week moving average line even with the correction. The weekly OBV line has been neutral to bearish as it did not make a new high along with prices. The Moving Average Convergence Divergence (MACD) oscillator has crossed to a take profits sell signal in early February.
Bottom line: It would be nice to have SNA bottom here and turn up again but without strong fresh signs of buying (i.e., a rising OBV line) I would stand aside at this juncture.
