Last night in his "Executive Decision" segment of Mad Money, Jim Cramer talked with Richard McVey who is the founder, chairman and CEO of MarketAxess Holdings (MKTX) . MKTX is a bond trading platform. In a previous life in the 1990s I was heavily involved in the fixed income markets analyzing U.S Treasuries, gilts, bunds, OATS and JGBs, and saw the start of the transition from seat of the pants' trading and relationships to the electronic world.
(For more on MKTX, see Forgive and Forget -- and Buy: Cramer's 'Mad Money' Recap)
Gone are the days of trades being made at Harry's of Hanover. Enough nostalgia, let's check out the charts and indicators.
In this daily bar chart of MKTX, below, we can see that prices have been "rolling over" since December with a number of technical indicators showing weakness. Has the decline run its course or should we be worried about the risk of further declines? Let's check closer.
MKTX is now below the declining 50-day moving average line and has closed below the cresting/flattening 200-day line. Prices are retesting the February low area and for now holding above chart support around $185. Notice the pickup in volume in July when prices broke the 200-day average line?
The daily On-Balance-Volume (OBV) line peaked back in March and has recently moved to a new low for the move down. A declining OBV line is a sign of more aggressive selling.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is in bearish territory below the zero line.
In this weekly bar chart of MKTX, below, we can see that prices have been rolling over for months. MKTX is below the 40-week moving average line.
The weekly OBV line shows a peak in March and the MACD oscillator is close to an outright sell signal if it moves below the zero line.
In this Point and Figure chart of MKTX, we can see a bearish price projection of $166.70. This target may be too low in my opinion but I still need to put it out there. The $186.00 low of February (look for the "2" on the chart) would have to be broken to open the way to further declines in the near-term.
Bottom line strategy: MKTX has been showing weakness on the charts and indicators since it made a high in March. I need to see that traders and investors are becoming more aggressive buyers with a rising OBV line before I step in and recommend the long side.