Broadcom Inc. (AVGO) has reached one of our upside price targets so a fresh review is needed.
We last looked at AVGO on Aug. 31 and recommended, "Traders and investors could stay long AVGO ahead of earnings as all the charts are bullish. I have no special knowledge of the earnings' numbers, but it looks like a positive report is being discounted. Risk a close below $315. $400 and $421 are the next upside price targets."
Now that prices have passed $400 a new strategy may be warranted.
In the updated daily bar chart of AVGO, below, we can see that the shares have traded higher since our last review. The $400 price target has been reached and we are not far from the $421 objective. Traders could raise stop protection to $370 from a close below $315. Prices are above the rising 50-day moving average line but a bit extended when compared to the rising 200-day line that intersects around $310 now.
Trading volume has been diminishing since early September which is not a bullish setup. The On-Balance-Volume (OBV) has not broken above its October peak even though prices have made new highs. The 12-day price momentum study is showing lower highs from September while prices have made higher highs. This is a bearish divergence and can foreshadow a correction or pullback.