Broadcom Inc. (AVGO) is due to report second-quarter results on Thursday after the close of trading. In our last review of AVGO on Dec. 8 we wrote, "Raise stop protection to $370 and look to book some profits on approach to $420. Our new Point and Figure target of $490 cannot be ruled out, but with price momentum slowing I don't want to be too bullish on AVGO."
Let's revisit the charts of Broadcom, which is a holding of Jim Cramer's Action Alerts PLUS charitable trust.
In this daily bar chart of AVGO, below, we can see that traders got several chances to take profits at $490 in February. Prices corrected in March and then retested the $490 area in April. Prices corrected into May and have rallied again. AVGO is trading above the bottoming 50-day moving average line and above the rising 200-day line. The On-Balance-Volume (OBV) rallied into late March but is rising again after a soft patch in April. The Moving Average Convergence Divergence (MACD) oscillator is ready to cross above the zero line for an outright buy signal.
In this weekly Japanese candlestick chart of AVGO, below, we can see a couple recent lower shadows just above the rising 40-week moving average line. The weekly OBV line looks like it is turning upward again in May. The MACD oscillator is pointed down but narrowing toward a new buy signal.
In this daily Point and Figure chart of AVGO, below, we can see a projected target of $567.
Bottom line strategy: AVGO has turned upward again and traders could go long on available weakness ahead of its earnings announcement. Risk to $425. Targeting the $567 area.
(AVGO is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
