Avalonbay Communities (AVB) has made a number of rallies the past 12 months. Though AVB has made higher highs, the deep corrections and a lack of new highs from the On-Balance-Volume (OBV) line give us a weak chart picture.
In this daily chart of AVB, above, we can see prices have broken below the 50-day and the 200-day moving averages. The slope of the 50-day average is now pointed down. The OBV line turned down in early May and the Moving Average Convergence Divergence (MACD) oscillator is below the zero line, telling us we should be trading from the short side. The two lines in the oscillator look poised for a crossover, but this will only be a cover-shorts signal if it happens.
In this three-year weekly chart of AVB, above, we can see prices are trading below the 40-week moving average. The OBV line peaked in mid-2015 and is edging lower, telling us sellers of AVB are more aggressive than buyers. The MACD oscillator is headed down to the zero line for an outright sell signal. Closes below $168 and then $160 are likely to wake the bear from hibernation.
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Here's my take on these blank check companies as the froth flattens -- and their post-merger vote floors fall out from under them.
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