Shares of Broadcom (AVGO) popped after the company's quarterly results Thursday night. Company guidance also surpassed expectations. In my September 1 review of Broadcom, I had a bearish outlook and the shares declined to a low in October.
Let's check the charts again as the shares are up sharply in early Friday trading.
In this daily bar chart of AVGO, below, we can see the price action as of Thursday's close. The rally from mid-October has broken the downtrend line (not drawn) from the December 2021 high. The shares are trading above the rising 50-day moving average line and Friday we should see AVGO above the 200-day line.
The daily On-Balance-Volume (OBV) line shows improvement from the middle of October and trading volume has been heavy since early September. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in bullish territory but has crossed to a take profit sell signal.
In the weekly Japanese candlestick of AVGO, below, we can see an improving technical picture. Prices are trading above the 40-week moving average line. A harami bottom reversal can be seen in October.
The weekly OBV line shows some slight improvement since October. The weekly MACD oscillator has crossed to the upside for a cover shorts buy signal.
In this daily Point and Figure chart of AVGO, below, we can see a price target in the $584 area.
In this second Point and Figure chart of AVGO, we used weekly price data and the charting software has projected a very impressive upside price target in the $821 area. Wow.
Bottom-line strategy: Shares of AVGO are headed higher and we want to participate so the question is where to buy it and what to risk. Upside price gaps create a problem in that it can mean we might have to assume more risk than we want to. Tentatively I would like to buy AVGO at $550 or lower and then risk to $510.
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