• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

Charts: Splunk Has Further to Fall

Here's what the charts and indicators are telling us.
By BRUCE KAMICH
Sep 21, 2020 | 07:58 AM EDT
Stocks quotes in this article: SPLK, SNOW

In his first "Executive Decision" segment during Friday night's Mad Money program, Jim Cramer spoke with Doug Merritt, president and CEO of Splunk Inc. (SPLK) , the big data company with shares down 11.5% over the past month as money managers make room for new offerings such as Snowflake (SNOW) .

Merritt explained that with more and more devices connecting to the Internet, companies need firm's like Splunk to help them capture all of this new data and make sense of it all. Soon, he said, every company will become a data company as they digitize their operations.

When asked about the flood of new companies in the big data space, like Snowflake, Merritt explains that while there are a lot of players, Splunk has been around for 15 years and is still among the fastest growing companies at its size. 

We last looked at SPLK back on August 25 ahead of earnings and wrote that. "We have no special knowledge about what SPLK is going to report to shareholders. We do have an opinion about the charts and indicators. Overall, the charts and indicators are mixed but the trends are up heading into earnings. I would continue to hold longs risking a close below $180. The $233 area is our first target with the $260-$278 area after that."
 
Let's check out the charts of SPLK again as traders should have been stopped out last week. 
 
In the daily bar chart of SPLK, below, we can see that the shares have been weak this month. SPLK is trading below the now declining 50-day moving average line. Prices have broken below the lows of August and also July as they push down into support from June.
 
The trading volume has increased from late August as traders are voting with their feet. The On-Balance-Volume (OBV) line has been in a decline from early August telling us that sellers of SPLK have been more aggressive.
 
The Moving Average Convergence Divergence (MACD) oscillator peaked in early June and has diverged from the price action for months now. The MACD oscillator crossed below the zero line earlier this month for an outright sell signal.

In the weekly bar chart of SPLK, below, we can see a weakening picture. Prices have declined and are in a position to test the now cresting 40-week moving average line.

 
The weekly OBV line shows weakness as does the MACD oscillator which has crossed to the downside for a take profits sell signal.

 
In this daily Point and Figure chart of SPLK, below, we can see a potential downside price target around $143 but better chart support is probably in the $130s.
 
 
Bottom-line strategy: Traders should have been stopped out with the close below $180 unless they managed to take profits on strength in early September. The charts and indicators are weak now and SPLK could decline to the $143 area or even lower in the weeks ahead.
 
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Investing | Stocks | Technical Analysis | Software & Services | Mad Money | Executive Interview

More from Stocks

In a Week Full of Surprises, This Was the Market's Biggest

James "Rev Shark" DePorre
Feb 3, 2023 4:42 PM EST

We had the Fed's rate decision, jobs numbers, and mega-cap tech earnings land. But here's what was the wildest action.

3 High-Yield REITs for Safe Dividend Income

Bob Ciura
Feb 3, 2023 2:31 PM EST

These names have joined the ranks of the world's most elite dividend growth companies as Dividend Aristocrats and/or Dividend Kings.

Holy Fed, Batman! FAANG Has a Major Toothache!

Jim Collins
Feb 3, 2023 12:23 PM EST

Here's why the markets are sounding a lot like the campy 'Batman' show -- and how to make sure you don't succumb to the market's Joker.

Apple Is Far Better Positioned Than Amazon or Alphabet: Here's the Trade

Stephen Guilfoyle
Feb 3, 2023 12:20 PM EST

One thing is clear: Apple's disappointments are far more correctable, and their cash flow is more diversified than either AMZN or GOOGL.

Why Is Sector Allocation So Important Now?

Maleeha Bengali
Feb 3, 2023 11:00 AM EST

The fact of the matter is that the Fed knows as much as the market does, or perhaps even less.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:58 PM EST REAL MONEY

    Sarge Guilfoyle Breaks Down the Jobs Report, Fed Policy and Stocks!

    Watch it here!
  • 11:35 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Trading an Irrational Market
  • 02:10 PM EST REAL MONEY

    Fed Rate Decision

    Fed Lifts Benchmark Rate by 25 Basis Points, Sees ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login