Seagate Technology PLC (STX) has experienced gaps to the upside and gaps to the downside the past 12 months creating an "uneven" chart picture. However, the longer-term charts are pointing to a potentially very bullish outlook. With some tech names soaring toward the stratosphere in recent months, a review of charts that are still in a major base could be very worthwhile. If I have piqued your interest in STX, please continue to read the rest of the analysis.
In this daily bar chart of STX, below, we can see a chart that has been hard to position, with upside gaps in January and October and downside gaps in April and July. This is not for the faint of heart. Currently STX is trading between the rising 50-day moving average line and the flat 200-day moving average line. Despite all the gaps we noted, the On-Balance-Volume (OBV) actually shows an uptrend from January. A rising OBV line in a downtrend is a potentially very bullish story in that buyers have accumulating shares in a downtrend. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in bullish territory but pointed down in the short run.
In this weekly bar chart of STX, below, we miss the gaps from the daily chart and can see a bigger picture. Here we can see a possible base pattern from the middle of 2015. There is a possible "neckline" across $50 and prices have tested the underside of the declining 40-week moving average line. The weekly OBV line shows an uptrend from May 2016 with a slight new high in the past month. Buyers of STX have been pretty aggressive the past year plus, and this buying could translate into much higher prices in the next few months. The weekly MACD oscillator recently crossed to the upside for a cover shorts buy signal.
In this Point and Figure chart of STX, below, we have used weekly data to get a long-term picture and potential price target of $7.150.
In this longer-term weekly bar chart of STX, below, we can see a broad base pattern from 2003 to 2012. Prices broke out on the upside in late 2012 and soared to $70 by early 2015. A correction back to the base pattern unfolds into 2016. The latest price action is a rally to $50 followed by a pullback to a higher low around $30. A rally to break above $50 could give us a rally back to $70 again.
Bottom line: Aggressive traders could position STX from the long side at current levels, risking a close below $32. Add to the long on strength above $40 and $44, looking for gains back to $50 and then possibly $70.