Splunk (SPLK) is a software platform to search, analyze and visualize the machine-generated data gathered from websites, applications, etc. The company is reporting its quarterly numbers after the close of trading Wednesday, so let's check out the charts and indicators ahead of the print.
In our last review of SPLK on Oct. 21 we wrote that "If you are still long SPLK from June 2, great. Traders could go long SPLK at current levels or add to existing longs. Risk to $143. The $225 area is our first price target. Our longer-term target is $275."
In the daily bar chart of SPLK, below, we can see that the shares worked slightly higher into November but gapped lower to break below the 50-day and 200-day moving averages. The slopes of these two indicators have turned bearish (negative).
The daily On-Balance-Volume (OBV) line has weakened this month and the 12-day price momentum study does not show us any slowing in the decline.
In the weekly Japanese candlestick chart of SPLK, below, we can see that the shares are pointed downward for a possible test of the lows of 2021.
The slope of the 40-week moving average line is negative and the weekly OBV line shows a small double top pattern. The 12-week price momentum study shows a bearish divergence into the October high.
In this daily Point and Figure chart of SPLK, below, we can see a potential downside price target in the $95 area. The price gap of November disappears on this kind of chart.
Bottom-line strategy: Longs should have been stopped out. Traders should be flat and while we could get an oversold bounce at any time the path of least resistance for shares of SPLK appears to be lower. Avoid the long side.
