Taser International (TASR) has had a good run to the upside this year, but now traders and investors need to take a more cautious approach to existing and new long positions.
In this one-year daily chart of TASR, above, we can see that it has more than doubled for investors since early this year. The slope, or trend, of the 50-day simple moving average line is still positive, but prices have closed below this line, which is a sell signal for some traders using moving average signals. Prices remain above the rising, 200-day moving average line.
The On-Balance-Volume (OBV) line has been rising, and is positive for the price action, but there is a slight peak to this line in early July. A rising OBV line signals aggressive buying, and a declining line tends to mean that sellers have picked up their pace of dealings. The Moving Average Convergence Divergence (MACD) oscillator, which is a trend-following indicator, has been in a sell mode since late July.
In this three-year weekly chart of TASR, above, we can see that the rally this year stalled around $30, which turns out to be the bottom end of a resistance zone from 2015. On the plus side, TASR is above the rising, 40-week moving average line. The OBV line on this weekly timeframe looks like it is turning lower. The MACD oscillator on this timeframe is narrowing towards a possible sell signal.
Strategy: With a weakening pattern on the charts, traders and investors should be prepared for a deeper pullback to the $24 area. If prices hold around $24 and the OBV line improves, TASR might be worthy of repurchase, but we will have to see how it goes. A strong close above $30 with increased volume would put the bull back in charge.