AeroVironment Inc. (AVAV) was covered recently on Real Money and was mentioned again during the Lightning Round on Mad Money last night. Two weeks ago I wrote that " If you bought AVAV back in October when Jim talked about it on "Mad Money" you are sitting pretty. Investors should use a sell stop just below $90. Because prices are so far above the 200-day moving average line I would anticipate a period of sideways price action or even a pullback into the $110-$100 area." Indeed prices have pulled back into the $110-$100 area and they could weaken even further. Let's examine some new charts.
In this updated daily bar chart of AVAV, below, we can see the zenith around $120. Prices dipped, volume increased, the On-Balance-Volume (OBV) line turned down and the Moving Average Convergence Divergence (MACD) oscillator crossed to a take profits sell signal.
In this weekly bar chart of AVAV, below, we can see a two-week reversal pattern in the price action. Prices are still pretty extended above the 40-week moving average line. The weekly OBV line shows the start of a turn lower while the MACD oscillator has started to narrow towards a possible take profits sell signal.
In this Point and Figure chart of AVAV, below, there is a downside price target in the $89 area.
Bottom line strategy: AVAV still looks vulnerable to further weakness. Protect longs.