Fundamental coverage of financial software firm Intuit (INTU) was started with a "Buy" (outperform) rating Thursday from Moffett Nathanson, but the charts and indicators suggest a different conclusion.
Let's check out the charts.
In this daily bar chart of INTU, below, we can see that prices have been cut in half in the past year. Prices were trading around $700 in late November and reached $350 in May. A recovery rally developed and lasted into August but unfortunately the music stopped in August short of the underside of the declining 200-day moving average line. The slope of the 50-day moving average is cresting as the stock price continues to weaken. The On-Balance-Volume (OBV) line bottomed in March and May and improved into August. Lately the OBV line is slipping lower. The Moving Average Convergence Divergence (MACD) oscillator has crossed below the zero line for an outright-sell signal.
In this weekly Japanese candlestick chart of INTU, below, we can see the weak OBV line leading the way lower. Prices have not (yet) made a new low for the move down but the OBV has done so. The slope of the 40-week moving average line is negative. The MACD oscillator is weakening from below the zero-line.
In this daily Point and Figure chart of INTU, below, we can see a downside price target in the $341 area.
In this weekly Point and Figure chart of INTU, below, we used close only price data. Here the software suggests a price target in the $357 area.
Bottom line strategy: Fundamental analysts are comfortable buying a stock in a downward trend. I prefer to use technical analysis and technicians prefer to follow the trend. The trend in INTU is still down.
