The shares of Dover (DOV) have been experiencing some very choppy price action the past four to five months.
I am not sure what this means for prices going forward, but let's take a look at the indicators and see what our options and strategy might be.
In this daily chart of DOV, above, we can see an uptrend until July/August and then prices turn sideways. Beginning in June, the price action becomes different from the rally from January through May. The swings up and down are bigger and the volume is heavier. If we actually get wider swings, I might conclude we were looking at a broadening pattern. Broadening patterns can be reversal patterns and they can be continuation patterns. During this sideways price action the 50-day simple moving average line peaks and turns down, but the 200-day line is still pointed up and has been tested this month. Since a peak in July, the On-Balance-Volume (OBV) line has been roughly declining, suggesting that sellers have been more aggressive over the summer. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line but poised to generate a cover-shorts buy signal.
Looking at this weekly chart of DOV, above, we can find bullish and bearish clues. Prices are above the rising 40-week moving average line, but the line is being tested. The weekly OBV line has been weaker the past two months, pointing to liquidation. The weekly MACD oscillator crossed to a liquidate-longs sell signal.
Bottom line: Reversal or continuation? If DOV moves above $75, it is probably headed higher. If DOV closes below $64, it is probably going lower.