Xilinx Inc. (XLNX) is rolling over in what will probably be a "normal" correction. A test of nearby support in the $68-$66 area could develop over the next few weeks. Let's review our indicators and charts this afternoon for guidance.
In this daily bar chart of XLNX, below, we can see that prices are off their best levels as prices have declined in recent sessions. Prices are above the rising 50-day moving average line but the line is not far below the market. The daily On-Balance-Volume (OBV) line has rolled over this month and tells us that sellers of XLNX have been acting more aggressive with heavier volume being transacted on days when the stock has closed lower.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profits sell signal.
In this weekly bar chart of XLNX, below, we can see that prices are above the rising 40-week moving average line which intersects around $64 now. The weekly OBV line has made three roughly equal peaks since January even though prices have made three higher peaks. This bearish divergence may prove a problem in the weeks ahead.
In the bottom panel is the slow stochastic indicator, which shows an overbought sell signal. In the past year and a half these overbought sell signals have resulted in downward corrections.
In this Point and Figure chart of XLNX, below, we can see the strong uptrend since last year. XLNX does not show the same distribution pattern currently as can be seen before previous pullbacks. This chart also shows an upside price target of $77, which may have to wait awhile.
Bottom line: Because XLNX does not show a lot of selling or distribution on the charts it may not pull back much despite the overbought readings from the stochastic indicator.
