Splunk (SPLK) could be making a key reversal day, so short-term traders need to be more cautious in the days ahead. We do not know where prices will close today and what Monday could bring, but let's review the charts and indicators to be prepared.
Jim Cramer talked about this cloud name at the top of the Mad Money program last night.
In this daily bar chart of SPLK, below, we can see that the price of SPLK traded sideways from last March until late December. At the end of 2018, SPLK launched a rally from $90 to nearly $145 today. Prices have retreated sharply from the day's zenith, and volume is heavier than recently.
A new high for the move up, a big high to low range in price, and heavy volume are the earmarks of a key reversal day. Prices will need to have carryover selling on Monday to confirm the reversal, however.
Meanwhile, SPLK is still above the rising 50-day moving average line. The slower-to-react 200-day line is bullish too.
The daily On-Balance-Volume (OBV) line looks like it turned higher before prices did with its rise starting in August. In February the OBV line has stalled while prices marched higher. This is a bearish divergence. In the lower panel is another bearish divergence. Price momentum has been making lower highs while prices have made higher highs - the rate of the advance has been slowing.
In this weekly bar chart of SPLK, below, we can see that prices have more than doubled in the past three years. SPLK is above the rising 40-week moving average line.
The weekly OBV line has been improving from the middle of December, but has not made a new high like prices have.
The weekly MACD oscillator is bullish and rising.
In this Point and Figure chart of SPLK, below, we do not have (yet) prices reversing to a down column of "O's".
An upside price target of $152 is still shown. A decline to $131.30 will weaken this chart.
Bottom line strategy: We cannot say with 100% certainty that the price of SPLK has topped, but we can say that prices are looking vulnerable to some sort of correction. Traders should look at their cost basis and decide what sort of action represents good discipline.