This week's earnings are going to be tough, Jim Cramer told his Mad Money viewers Friday night. The stock market is trying to get back to normal, he said, but no one is quite sure what the new normal really is.
Cramer's game plan for this week starts Monday evening, when we hear from NXP Semiconductors (NXPI) . Let's check out the charts of this maker of "mixed signal and standard products" ahead of tonight's earnings report.
We last looked at the charts of NXPI on February 3, when we wrote that, "I have no special knowledge of the upcoming numbers for NXPI. Prices may have pulled back recently with the broad market weakness and not be "blink" before earnings. But the Point and Figure chart shows a risk to $118 so I would not acquire a large long position ahead of earnings." As things turned out the downside risk on NXPI (and the broad market) was a lot more than $118.
Let's check out the charts again ahead of earnings after the close today.
In this daily bar chart of NXPI, below, we can see that prices have rebounded from their March low. Prices are now close to a retest of the declining 50-day moving average line. The trading volume looks like it doubled into the March low but has been relatively light on the rebound.
The daily On-Balance-Volume (OBV) line has actually moved still lower from the middle of March suggesting that sellers of NXPI are still more aggressive than buyers.
The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the upside in late March for a cover shorts buy signal. Now the indicator is close to the underside of the zero line.
In this weekly bar chart of NXPI, below, we can see that prices broke the lows of 2018 before rebounding. Seems like buyers were not too anxious to buy the dip. The slope of the 40-week moving average line is negative.
The weekly OBV line shows only a very minor improvement from the March low. The MACD oscillator is well below the zero line in sell territory and only slowly narrowing.
In this daily Point and Figure chart of NXPI, below, we can see a potential upside price target of $122 but also that a trade at $97.41 (a new high on this chart) is needed to refresh the uptrend.
Bottom line strategy: The price of NXPI has worked higher from its March low but trading volume and the OBV line are not confirming the move up. This happens sometimes and it is a problem for old-time chart readers like myself. The near-term trend of NXPI is up but the lack of expanding volume does not give me confidence in the move.