Duck Creek Technologies (DCT) develops industry-specific software that helps insurance carriers to deploy and manage their products and services. The company was one of my 2021 top picks. The shares reached my price target and subsequently tumbled lower and lower in 2021 and 2022.
Duck Creek is scheduled to report their latest numbers to shareholders Thursday evening after the close of trading, so l et's check out the charts.
In the daily bar chart of DCT, below, I see a mixed picture. The shares have turned sideways after a long decline. DCT has been trading around the 50-day moving average line but remains below the declining 200-day line.
The On-Balance-Volume (OBV) line shows weakness the past year and that confirms the price weakness. The 12-day price momentum study is encouraging in that the lows are higher since April telling us that the pace of the decline has been slowing for months. DCT is still making lower lows so the momentum study is showing us a bullish divergence when the two are compared. Bullish divergences can, at times, foreshadow rallies.
In the weekly Japanese candlestick chart of DCT, below, I see a glimmer of improvement. The most recent candle pattern looks like a bullish hammer pattern. All bottom reversals need confirmation. DCT would need a white real body (bullish) this week to confirm the hammer as a reversal pattern. The slope of the 40-week moving average line is bearish.
The weekly OBV line shows the start of some improvement in the past three months. The 12-week momentum study also shows a slowing of the decline and a bullish divergence.
In this daily Point and Figure chart of DCT, below, I can see a potential downside price target in the $9 area.
Bottom-line strategy: I have no special knowledge of what DCT will be telling shareholders Thursday evening but the charts and technical indicators are not presenting a strong enough picture to recommend purchase. Avoid the long side of DCT for now.
