Back on July 23 we recommended the long side of NortonLifeLock (NLOK) , writing that "NLOK looks like it is positioned to move higher from here. Traders could go long at current levels and on strength. Risk a close below $19 for now while looking for gains to the $27 area and possibly $35 longer-term." NLOK did rally into late August but stopped short of our $27 price target.
NLOK began a decline in early September so let's review the charts again.
In this daily bar chart of NLOK, below, we can see that prices gapped below the 50-day and 200-day moving average lines in early September. NLOK has continued lower to break all the lows since late May. The 50-day moving average line has declined below the bearish 200-day moving average line for a dead cross or sell signal.
The On-Balance-Volume (OBV) line has been weak since August and tells us that sellers of NLOK have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator has been bearish since the middle of September when it crossed below the zero line.
In this weekly bar chart of NLOK, below, we see a bearish picture. Prices are in a downtrend below the declining 40-week moving average line. The $17-$15 area might act as support but we'll have to see how things develop.
The weekly OBV line has been under pressure since August and has made a new low for the move down. A declining OBV line tells us that sellers are more aggressive.
The MACD oscillator moved below the zero line last month for an outright sell signal.
In this daily Point and Figure chart of NLOK, below, we can see a potential downside price target in the $12 area.
Bottom line strategy: Not every recommended trade works out. Risk management is key to successful investing and trading. Avoid the long side of NLOK as the charts look bearish.
(NortonLifeLock is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells NLOK? Learn more now.)
