Our colleague on the West Coast, Eric Jhonsa, recently looked at what he saw as the top-10 future trends that will be in the forefront of technology in 2017 -- from artificial intelligence and virtual reality to the Cloud and, of course, mergers and acquisitions. I thought it was a very thoughtful article that you should read and forward to your best friends.
This morning I looked through the various companies that were mentioned with an eye on the charts and indicators. The list was fairly long so I culled out three names that really got my attention for different reasons -- Sony ADRs (SNE) , Check Point Software Technologies (CHKP) and Workday (WDAY) .
In this one-year daily chart of SNE, above, we can see that SNE rallied from a January-February low to a small top formation in August-October. Prices have been correcting lower since mid-October but that appears to be a pullback within a larger bull trend. SNE is below the declining 50-day moving average line and the still-rising 200-day line.
The On-Balance-Volume (OBV) line has declined for two months but has stabilized in recent weeks and suggests that whatever selling was behind the decline has dried up.
In the lower panel is the 12-day momentum study which shows a bullish divergence with higher lows vs. the price action.
In this three-year weekly chart of SNE, above, we can see that prices are below the rising 40-week moving average line but it won't take much of a rally to put prices back above this long-term moving average. The weekly OBV line only shows a slight decline over the past four months and suggests that while there has been selling it has not been too aggressive and not for too long.
In the bottom panel, the Moving Average Convergence Divergence (MACD) oscillator is still in positive territory above the zero line and moving toward a bullish crossover or buy signal.
Strategy: Traders could probe the long side of SNE on weakness toward $28 risking a close below $26. Additional buying can be done on a close back above $30.
In this daily chart of CHKP, above, we see a broad sideways trend for the past tw months. Prices have crossed above and below our favorite moving averages. Prices are currently above the rising 50-day average line and the slightly rising 200-day average line. While the price trend appears positive the rest of our technical tools are not confirming. As prices made new highs for the move up in December the OBV line did not match or confirm that advance.
In addition, you can see that momentum was weaker on the second push up from November to December. A weaker momentum picture is a bearish divergence and tells you that the bulls are losing conviction.
In this weekly chart of CHKP, above, we can see that prices are above the flat 40-week moving average line. There have been a number of rallies into the $85 to $90 area over the past two years but they have all failed. The weekly OBV line has been neutral for most of the past two years.
In the bottom panel is the weekly MACD oscillator which is above the zero line and headed higher.
Strategy: CHKP could move higher from here, but it would probably surprise me. The indicators suggest further sideways price action. If CHKP was able to finally clear the chart resistance in the $85 to $90 area then we might see a advance to around the $105 area.
In this daily chart of WDAY, above, we find little to attract us to the long side. WDAY is trading below the declining 50-day moving average line and below the flat 200-day line. The gap to the downside in early December was accompanied by heavy volume as traders and investors voted with their feet. The OBV line has been declining since early October and suggests that traders have been aggressive sellers for the past three months.
The lower panel shows the momentum study and so far no bullish divergences.
This three-year weekly chart of WDAY, above, is in a vulnerable position. Prices are below the flat 40-week moving average line. The weekly OBV line has turned lower and the MACD oscillator crossed below the zero line for an outright go short signal.
Strategy: Unless our indicators reverse direction we would avoid the long side of WDAY.
