Back on Dec. 8 we reviewed the charts of Ciena Corp. ( CIEN) ahead of earnings and the picture was positive for the tech stock. Prices gapped higher and raced up into the end of the month. The price strength was fleeting, though, and CIEN turned lower in early January.
Let's review the CIEN again as one sell-side firm recently made CIEN a new buy recommendation.
In the daily bar chart of CIEN, below, we can see that the shares made a rally failure at the underside of the declining 50-day moving average line and have broken below the cresting 200-day moving average line. CIEN has just made a rally failure at the underside of the 200-day line.
The On-Balance-Volume (OBV) line turned lower at the beginning of the year and tells us that sellers of CIEN are being more aggressive with heavier trading volume on days when CIEN has closed lower.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line but trying to signal a cover shorts buy signal.
In the weekly Japanese candlestick chart of CIEN, below, we see a bearish picture -- the top reversal pattern in December and the first week in January, the upper shadows in February, the long red (bearish) candle as prices broke the 40-week moving average line.
The weekly OBV line is pointed down and the MACD oscillator is too.
In this daily Point and Figure chart of CIEN, below, we can see a potential downside price target in the $37 area.
In this weekly Point and Figure chart of CIEN, below, we see the same $37 price target.
Bottom-line strategy: Hopefully traders nailed down profits at $124 in December. The charts have turned bearish so the strategy is to avoid the long side of CIEN until a new base pattern emerges.
