Shares of Cerner (CERN) have been caught up in a downtrend over the past year. Further declines for the supplier of healthcare information technology look possible as a key chart support looks vulnerable.
The price of Cerner has been under pressure with bounces failing to gain traction and new lows for the move down a near monthly event. Weakness in Cerner became more noticeable in early August when prices gapped down below the 50-day and 200-day moving averages.
Since early August, the On-Balance-Volume (OBV) line has been declining as the volume of shares traded on down days has been heavier than on days when the stock closed higher. Prices have been below the declining 50- and 200-day averages for several months now, reinforcing the bear case.
The longer-term chart of Cerner, above, shows how vulnerable the $50 level could be in the weeks ahead. Prices are well below the declining 40-week moving average line. The Moving Average Convergence Divergence (MACD) oscillator is bearish and the OBV line on a weekly time frame has been pointed down since October. The $50 level acted as support in early 2014 and as resistance in early 2013.
The further back in time you go, the less reliable support and resistance levels become. In February and early March, Cerner bounced off the $50 level, but a more serious test of that level could lie ahead. The next time Cerner is down, the support may give way.