We looked at Electronic Arts (EA) a few weeks ago, and we gave parameters to judge strength and weakness: "The daily and weekly indicators on EA are mixed -- some bearish and some bullish. Strength to $116.52 will open the way on the upside while a decline to $104.44 is likely to precipitate further declines."
With prices breaking above $116.52 and reaching $120 after our last update, we would favor the upside. But we are keeping a close eye on two divergences as we go forward.
In this daily bar chart of EA, above, we can see that prices are above the rising 50-day moving average line, as well as the rising 200-day line. The daily On-Balance-Volume (OBV) line did not make a new high for the move up as prices made new highs. This is a bearish divergence -- prices doing one thing and our indicator doing something else. In the lower panel is the 12-day momentum study, which shows lower highs from May to August while prices make higher highs.
In this weekly bar chart of EA, above, we can see that prices are above the rising 40-week moving average line. The weekly OBV line is making new highs with the price chart. The weekly MACD oscillator touched, but did not generate, a bearish crossover sell signal.
In this Point and Figure chart of EA, above, we can see the long-term uptrend, as well as a potential upside price target of $140. A decline to $113.10 would be a short-term negative.
Bottom line: The trend is up, and despite some bearish divergences on the daily chart, overall the patterns are bullish. Maintain longs, risking below $113.10.