Sprint (S) is in the news today as traders and investors react to the company's latest earnings' numbers. All well and good but I like to see how a stock reacts to the news rather than actually trying to understand and analyze a report or a conference call. My approach, or rather the technical approach, may be simple but if practiced right it can be a worthwhile addition to one's investment strategy.
Let's check out the charts and indicators of S.
In the daily bar chart of S, below, I can see a stock that looks like it is basing or bottoming since January. However, not all the indicators support that idea. Prices are above the rising 50-day moving average line this past month and we can see a number of tests of the still declining 200-day moving average line. A close above the 200-day line could happen today but a close above the July highs around $5.75 would be a stronger technical sign.
The level of trading volume has been relatively light and diminishing the past two months or so and that is not a positive. If traders and investors were bullish on a stock you typically seeing increasing volume as they increase their bullish positions.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has spent much of the last 12 months below the zero line, which tells me the trend is bearish. This indicator moved above the zero line in late June for an outright go long signal on this time frame. Price strength in the next few days could turn the MACD oscillator up again for a fresh go long signal.
In the weekly bar chart of S, below, we can see that some of the indicators are more positive than on the daily chart above. Prices are testing the declining 40-week moving average line and a close above the line is a start toward a stronger stock. The weekly OBV line shows improvement the past three months which suggests more buying than the daily chart.
The weekly MACD oscillator has been improving for months but it is still below the zero line.
In this Point and Figure chart of S, below, we see a potential base pattern but a rally to $5.72 is needed to turn this chart more positive.
Bottom line: Is S making a comeback? It would be nice to get long close to the bottom and limit the risk if we are wrong. Traders could consider going long S on strength above $5.75. Risk below $5.25. On the upside we need to go in small steps. The $6.25-$6.50 area is the first target.
