Nokia Corp. (NOK) is the Stock of the Day here at Real Money after France rejected a move to tighten rules on 5G providers. We looked at the charts of NOK in early January and wrote at the time, "Do some fundamental research on NOK but consider going long and risking below $5.50. Add above $6.25 and above $6.50 looking for $16.25." Let's take a few minutes to check the charts and indicators again for Nokia, which is a holding in the Stocks Under $10 portfolio.
In this daily bar chart of NOK, below, we can see how prices broke out to the upside in the back half of January with a gap above $6.25 and gains to more than $6.50 before a recent pullback. Volume surged in the past two weeks as prices rallied and then shrank as prices retreated; this is the pattern that technical analysts like to see.
NOK is still above the rising 50-day moving average line and the bullish 200-day moving average line. The daily On-Balance-Volume (OBV) line has been moving upward from a low in October, suggesting that buyers of NOK have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator largely has been above the zero line since late October. The oscillator just crossed to the downside for a take-profits sell signal.
In this weekly bar chart of NOK, below, we do not have Thursday's pre-market trading on this chart, but it is likely that NOK could test its rising 40-week moving average line. The weekly OBV line shows strength from late November and a recent dip. If volume on this pullback remains light or lighter than during the rally, the OBV line should stay positive. The weekly MACD oscillator crossed above the zero line in December but has narrowed slightly in the past few weeks. A take-profits crossover may or may not materialize.
In this Point and Figure chart of NOK, below, we can see that prices broke down from a small double-bottom pattern and has overshot a $6.31 price target. Looking at the volume at price bars on the left side of the chart, we can see that there should be strong support here as there was a lot of volume traded in this area.
Bottom line strategy: NOK has declined a bit in front of Thursday's news, so I am not looking for a lot of spillover selling. Continue to risk below $5.50 on longs.
