Virgin Galactic Holdings ( SPCE) gapped lower Friday on a downgrade to "sell" from "hold" by a sell-side firm as it seems the company needs more money as it continues to burn cash. The space tourism company also said it had postponed the start of its commercial flights.
Let's check out the charts of this venture that has been developing a spaceflight system designed to offer travelers high-ticket space tourism adventures.
In the daily bar chart of SPCE, below, we can see that the shares have been trying to bottom since February but Friday's gap lower is going to upset the buyers. SPCE is retesting the bottoming 50-day moving average line. The 200-day line is still in a downward trend and intersects just above $10.
Trading volume has not really increased the past few months and tells us that investors are not being attracted to the stock. The On-Balance-Volume (OBV) line has been in a neutral trend since April.
The Moving Average Convergence Divergence (MACD) oscillator is only slightly above the zero line and poised to turn lower. A new sell signal could come in the days ahead.
In the weekly Japanese candlestick chart of SPCE, below, we are not finding any bullish encouragement in the indicators. Prices are still below the declining 40-week moving average line.
The weekly OBV line is neutral despite the low price level. The MACD oscillator remains below the zero line even after months of improvement.
In this daily Point and Figure chart of SPCE, below, we can see a downside price target in the $6-$5 area.
In this weekly Point and Figure chart of SPCE, below, we can see a potential upside price target but a trade at $6.50 is likely to turn the chart bearish.
Bottom-line strategy: A trip to Necker Island may be a better investment than shares of SPCE.
