Acacia Communications, Inc. (ACIA) made a sharp and painful gap to the downside yesterday. Ouch. We reviewed the charts and indicators of this telecommunications company back in July, noting that "ACIA is in a downtrend with few signs of a turnaround."
Hopefully you were not caught long. Let's take a look at the damage this morning.
In this daily bar chart of ACIA, below, can see that prices traded sideways from November into April roughly between $35 and $45. Prices crossed above and below the mostly flat 50-day moving average line. The slope of the 200-day line was negative the entire time and there was a short-lived rally above that indicator.
What is telling that during this sideways trend we can see that volume was light and the daily On-Balance-Volume (OBV) line did not show aggressive buying.
In the lower panel the Moving Average Convergence Divergence (MACD) oscillator was mostly below the zero line from October telling us that ACIA had little to no trend strength.
In this weekly chart of ACIA, below, we can see that prices are below the declining 40-week moving average line. Prices are retesting the lows from May 2016. Volume surged with the gap yesterday. The weekly OBV line has made a new all-time low and the MACD oscillator has given a new outright sell signal.
In this Point and Figure chart of ACIA, below, we can see a longer-term downtrend over the past year and a potential downside price target of just $10.00.
Bottom line: ACIA will need to make a low and then a bottom pattern before being considered for a long position. This will probably be a long repair process. It is a good thing there are plenty of other companies to consider in the meantime.