Approach SAP With Caution

 | Dec 14, 2017 | 9:34 AM EST
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The shares of SAP SE (SAP) made a strong advance this year, but prices have stalled in the past three months. Prices could pull back a bit more in the short run until the longer-run bull resumes. Let's look and see how the daily and weekly charts fit together.

In this daily bar chart of SAP, below, we can see that SAP has spent most of December below the rising 50-day moving average line. The 200-day line is still rising and below the price action. The daily On-Balance-Volume (OBV) line rose until early November, when it peaked and started moving lower. The OBV advance confirmed the price rise for 11 months but now it is telling us that sellers are more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has slipped below the zero line for a sell signal.

In this weekly bar chart of SAP, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line has risen for the past two-plus years, but it looks like it has begun to level off. The weekly MACD oscillator shows a bearish divergence with a lower high when prices have made a higher high in recent weeks.

In this Point and Figure chart of SAP, below, we can see a possible downside price of $105 or so.

Bottom line: With some of our indicators suggesting that selling has picked up in the past six weeks, a cautious stance is preferred in the near term. A close below $101, however, could mean that a correction could be deeper than currently expected.

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