Fair Isaac (FICO) was rated a new fundamental "outperform" (buy) by a sell-side brokerage firm Wednesday with a $1,007 price target. Let's drill down into the charts and indicators of data analytic firm the to see if they are on the same page as the fundamentals.
In the daily bar chart of FICO, below, I see a bearish setup. Prices have been in a rising trend since October and FICO trades above the rising 50-day moving average line and above the rising 200-day moving average line. But moving averages are lagging indicators.
The trading volume histogram has been neutral instead of expanding and that is a problem for old-time chart readers like myself. The On-Balance-Volume (OBV) line plunged sharply in March and has not recovered.
The 12-day momentum study shows us a weakening pattern from July to August even though prices made higher highs. This is a small bearish divergence and needs to be monitored as it is a "heads up" that something may be changing.
In the weekly Japanese candlestick chart of FICO, below, I can see some chart developments that need watching. I see an upper shadow above $900 followed by a potential hanging man pattern. Bearish confirmation is still needed to call this a top reversal pattern.
The weekly trading volume has been on a decline since October. The weekly OBV line has been struggling to move higher the past four months. The 12-week price momentum study shows us a larger bearish divergence and suggests a serious decline could happen but the timing is not clear.
In this daily Point and Figure chart of FICO, below, I can see that prices have reached an upside price target in the $909 area.
In this weekly Point and Figure chart of FICO, below, I can see a price target of $954.
Bottom-line strategy: While the fundamental story for FICO may be positive the price action and loss of price momentum are concerns. Traders who may be long FICO should protect their gains with appropriate stop loss protection.
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