Splunk (SPLK) was reviewed earlier this month, and I wrote that, "SPLK is close to an upside breakout. Aggressive traders could go long SPLK above $113 risking to $101. The mid-$130's is my price target." SPLK gapped lower Friday and has only made a partial bounce back. Add in some bearish divergences that have appeared and it makes sense to do another review of the charts and indicators.
In this updated daily bar chart of SPLK, below, we can see and uptrend the past year with prices doubling. SPLK is still above the rising 50-day moving average line and perhaps extended above the rising 200-day line. The daily On-Balance-Volume (OBV) line did not move to a new high to confirm the price gains this month giving us a bearish divergence. Another bearish divergence can be seen with the lower price momentum peaks from May to June.
In this weekly bar chart of SPLK, below, we can see a two-year base pattern. Prices have rallied strongly in the past twelve months and are above the rising 40-week moving average line. The weekly OBV line is pointed up but it has not made a new high since March to confirm the new price highs. The 12-week price momentum picture has been showing lower highs since January which is a bearish divergence when compared to the price action.
In this Point and Figure chart of SPLK, below, we can see what the computer program has decided is a distribution pattern with a downside target around $104.
Bottom line: Do I think that looking at charts for the same stock every day is useful? Probably not a lot of change from one day to the next. Sometimes they can change in a day, but reviewing charts week to week or month to month is definitely useful. Some bearish divergences have shown up on SPLK this week along with a downside price target on the Point and Figure chart. Longs should raise stop protection to $106 or $107.