Digital music, podcast, and video service Spotify (SPOT) has advanced the past three months but the rally looks like it will run out of steam. Let's check out the charts and indicators.
In this daily bar chart of SPOT, below, I can see that prices have moved higher the past two months but the On-Balance-Volume (OBV) line has moved sideways. This is a small bearish divergence and probably not significant, but I would not want to just ignore it. I can see another bearish divergence from the 12-day price momentum study, which made a lower high from February to March, which diverges from prices making higher highs.
In this weekly Japanese candlestick chart of SPOT, below, I see a mixed picture. Prices made a large decline of around $300, from $380 to $80. SPOT has rallied above the 40-week moving average line. The weekly OBV line has improved but the 12-week price momentum study has diverged from the price action.
In this daily Point and Figure chart of SPOT, below, I can see that prices have exceeded an upside price target in the $93 area.
In this weekly Point and Figure chart of SPOT, below, I can see that prices have exceeded an upside price target in the $118 area.
Bottom line strategy: In recent weeks I have underestimated the upside strength in a number of tech names. I don't know if that will be the case with SPOT but the charts suggest that a downside price correction is possible. We'll see.
