Novavax (NVAX) gapped sharply lower Wednesday after the company said "substantial doubt exists" about whether it can stay in business." Ouch. Let's check out the charts and indicators as they "circle the drain."
In this daily bar chart of NVAX, below, I can see a stubborn downward trend in force. NVAX has spent much of the past year below the declining 50-day moving average line. The slope of the slower-to-react 200-day line is negative. The On-Balance-Volume (OBV) line has been in a downward trend from early August. The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero-line and bearish.
In this weekly Japanese candlestick chart of NVAX, below, I can see the past three years of price action. The chart shows a major top formation in the $260 area. Prices are trading weakly below the declining 40-week moving average line, The weekly OBV line has been in a longer-term downward trend. The MACD oscillator is bearish.
In this daily Point and Figure chart of NVAX, below, I used close only price data. Here the software projects the downside price target as $0 - zero. Ouch.
Bottom line strategy: NVAX is a falling knife and traders should never try to catch a falling knife.
