Broadcom Inc. (AVGO) is due to report its fiscal first-quarter results after the close of trading here on Thursday. Shareholders and analysts also will be focused on what the semiconductor maker may say about the state of its planned acquisition of VMware (VMW) . Let's see how Broadcom's shares are shaping up at this juncture.
In this daily bar chart of AVGO, below, I see a mixed chart. Prices are in an upward trend and trade above the rising 50-day moving average line, but a small pullback could break this indicator. The 200-day moving average line is just starting to bottom. The On-Balance-Volume (OBV) line has been steady to slightly firmer since October. The Moving Average Convergence Divergence (MACD) oscillator has been weakening since early December and is close to crossing below the zero line.
In this weekly Japanese candlestick chart of AVGO, below, I see some problems with the rally. Prices are above the slowly firming 40-week moving average line but I see a number of upper shadows above $600, telling me that traders have been rejecting the highs. Trading volume has weakened the past three months and the weekly OBV line has been stalled the past three months, suggesting a balance between bulls and bears. The MACD oscillator is above the zero line but narrowing, which tells me the trend strength is fading.
In this daily Point and Figure chart of AVGO, below, I can see a potential downside price target in the $561 area.
In this weekly Point and Figure chart of AVGO, below, I can see a big upside price target of $814.
Bottom line strategy: I don't know what AVGO will tell shareholder tonight. Shares of AVGO could move significantly higher in late 2023 and into 2024, but we need to deal with weak-looking charts in the short run. Let's sit out this earnings report.
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