Toll Brothers (TOL) has given back its upside breakout and is now testing support. I normally might be OK with a pullback in a stock to retest the breakout level -- $30 on TOL, but prices are still weak and are now testing support around $29 and the 50-day and 200-day moving averages.
In this daily chart of TOL, above, we can see that the 200-day moving average line is still pointed down and the 50-day average line is pointed up for now. The 50-day is about to cross above the 200-day average for a belated golden cross buy signal.
The On-Balance-Volume (OBV) line has been moving sideways the past three weeks despite the decline, which suggests traders are not making big adjustments in positions.
The Moving Average Convergence Divergence (MACD) oscillator is poised for an outright sell signal after a liquidate longs sell signal earlier this month.
In this three-year weekly chart of TOL, above, we can see that prices are above the still declining 40-week moving average line. The OBV line on this timeframe has been neutral for the past six to seven months. The MACD oscillator is below the zero line and looks like it has started to move toward a crossover and a new sell signal.
Bottom line: Weakness below $28 is possible and would make the chart more bearish.
