We looked at the charts of Stanley Black & Decker (SWK) at the beginning of August, and we had a short-term bearish view: "Bear flag or not, SWK looks like it can decline to the $135 area in the short run."
SWK has not reached $135, but the price action remains bearish with the 50-day moving average rolling over. Let's drill down on the charts and indicators.
In this updated daily bar chart of SWK, above, we can see how the slope of the 50-day moving average line has turned lower. The On-Balance-Volume (OBV) line turned lower in July and still looks negative and implies that sellers of SWK are more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line for an outright sell signal.
In this weekly chart of SWK, above, we can see prices are above the rising 40-week moving average line. The weekly OBV line has been rising for much of the past three years but it has diverged recently from the price action. The OBV line has not made a new high, as prices made new highs in June and July. The weekly MACD oscillator has crossed to the downside, signaling a take-profits sell.
In this Point and Figure chart, we have a longer-term upside price target of $153, but the near-term pattern is a minor distribution pattern and a trade at $138 could precipitate some further weakness to the low $130s.
Bottom line: The longer-term trend of SWK is positive, but it is the short-run weakness we want to navigate. SWK is still likely to trade down to the $135 area.