When we reviewed the charts of AeroVironment, Inc. ( AVAV) on May 3, we wrote that "If the Point and Figure charts are correct we should see the price of AVAV come down for a landing at lower levels. Avoid the long side for now."
The stock was upgraded Wednesday by a sell-side firm to "outperform" with a $100 price target so let's check the charts again.
In the updated daily bar chart of AVAV, below, we can see that the shares weakened after our May 3 review. Prices dipped to the $75 area and have firmed back to the underside of the 200-day moving average line.
The On-Balance-Volume (OBV) line shows improvement in May so far. The Moving Average Convergence Divergence (MACD) oscillator has narrowed and is close to a bullish crossover for a cover shorts buy signal.
In the weekly Japanese candlestick chart of AVAV, below, we can see a bottom reversal pattern -- a doji followed by a white real body for confirmation.
The OBV line is steady while the MACD oscillator has narrowed but is still above the zero line.
In this daily Point and Figure chart of AVAV, below, we can see an upside price target in the $100 area.
In this weekly Point and Figure chart of AVAV, below, the software is still seeing further weakness.
Bottom-line strategy: Aggressive traders could probe the long side of AVAV below $80 if available, risking to $72. Our target for now is $100.
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While support levels have been building and the number of new lows is declining, there is no sustained momentum outside a few big-cap tech stocks.
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