We recently wrote about KLA-Tencor (KLAC) and concluded that "KLAC is still in an uptrend but a correction could develop considering its distance from the 40-week moving average line. Traders should raise their sell stops to a close below $96."
In the past week, KLAC has marched to a new 52-week high. The pace of the rise has slowed and our view continues with some minor alterations.
In this updated daily bar chart of KLAC, above, we can see prices have continued higher, never approaching our suggested sell stop below $96. KLAC is still above the rising 50-day and the rising 200-day moving averages. The daily On-Balance-Volume (OBV) line is still positive but the 12-day momentum study is showing lower highs from April to May versus higher price highs in the same period. This difference is a bearish divergence and tells us the pace of the advance is slowing.
In this weekly chart of KLAC, above, we can see prices are a good distance above the rising 40-week moving average line. The weekly OBV line has leveled off the past six weeks suggesting that buyers and sellers are more in balance. The weekly MACD oscillator is still pointed up above the zero line but it looks like it is starting to narrow toward a potential crossover sell signal.
Bottom line: KLAC longs could take some profits on longs and raise their sell stops to a close below $99, up from $96.