Texas Instruments (TXN) was looking vulnerable when we reviewed the charts and indicators at the beginning of August noting that, "TXN could continue to trade sideways in the near-term but with the declining weekly OBV line I would be prepared for a decline to test and maybe break the rising 200-day moving average."
TXN traded sideways into early September and then prices and the indicators strengthened. Let's check the latest charts and indicators to see where TXN might be headed next.
In this daily bar chart of TXN, above, we can see the prices were testing the flat 50-day moving average line in August but now are clearly above the rising 50-day line. The 200-day moving average line is rising and was last tested in in early July.
The On-Balance-Volume (OBV) line has been rising for much of the past 12 months but the rise is more noticeable from the May low. Notice how the price dip in late June did not move the OBV much to the downside?
The Moving Average Convergence Divergence (MACD) oscillator is well above the zero line but the two moving averages that make up this indicator are crossing toward a possible take profits sell signal.
In this weekly bar chart of TXN, above, we can see that prices are well above the rising 40-week moving average line. The weekly OBV line has inched up in the past two months but has not yet pushed up to a new high to confirm the strong price action.
The weekly MACD oscillator is in a clear bullish mode as the two moving average lines are pointed up.
In this Point and Figure chart constructed on a weekly basis, above, we can see the rally from 2015. The chart shows a potential longer-term price target of $126.61 but the round number of $100 level will be a near-term target.
Bottom line: A $15 or $16 rally on an $80 stock is not unbelievable but the fact that it has happened in about a month makes TXN extended. TXN might trade sideways again before resuming its advance or prices might dip toward $90 in the short run. Over the intermediate term I would look for TXN to trade higher with $100 and then $125 as our upside price targets.