NetApp Inc. (NTAP) is among a list of companies set to report results this week as the second-quarter earnings season winds down. NetApp also will be bumped out of the Nasdaq 100 and the Nasdaq 100 equal weighted index effective here on Monday, Aug. 24. Let's check out the charts of NTAP to see how they are fairing.
In this daily bar of NTAP, below, we can see that prices turned lower in January ahead of the broad market weakness in February and did not bottom until late March instead of mid-March. NTAP rebounded slowly into early June but only retraced about a third of the prior decline. Prices are below the declining 50-day moving average line and the declining 200-day moving average line.
The On-Balance-Volume (OBV) line shows an interesting movement. The OBV line bottomed in March and moved higher to early August. Prices peaked in early June and the OBV kept rising, suggesting that more aggressive buying was unable to lift prices and that buyers in June and July are probably sitting with underwater positions or at least longs that are underperforming. These longs soon could turn into aggressive sellers as the OBV line has turned lower since the beginning of August. The Moving Average Convergence Divergence (MACD) oscillator has slipped below the zero line this month for an outright sell signal.
In this weekly bar chart of NTAP, below, we can see that prices have been in a downtrend from the middle of 2018. Prices are below the declining 40-week moving average line. The weekly OBV line has been weak for a long time and the MACD oscillator has been below the zero line for almost two years.
In this daily Point and Figure chart of NTAP, below, we can see that the software is projecting a potential downside price target in the $36-$35 area.
Bottom line strategy: I have no knowledge of the contents of NTAP's coming earnings report but the charts do not give us a positive reading. Avoid the long side.
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