Analog Devices (ADI) combines analog, digital, and software technologies into solutions, according to the company website. That may be above my pay grade, but the charts and technical indicators have been slowly improving the past three months.
Let's check and see if this price strength can continue.
In the daily bar chart of ADI, below, I can see that the stock made a low in early July and again in late September. Prices briefly made a new low in October and have subsequently rallied into December. Trading volume looks like it has increased since September, signaling more investor interest. The slopes of the 50-day moving average line and the 200-day moving average line have turned positive.
The On-Balance-Volume (OBV) line shows a decline to a low in October followed by a shallow rise. Buyers of ADI are becoming more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is back down to the zero line and looks like it is turning upwards.
In the weekly Japanese candlestick chart of ADI, below, I see an improved picture. ADI made a rally from 2020 to late 2021 followed by a correction. Prices are now back above the slowly improving 40-week moving average line. The candles are showing some recent lower shadows telling me that traders are rejecting the lows and the path of least resistance can be to the upside.
The weekly OBV line shows a long and bullish rise with just a three-month correction to the downside. The recent upswing from November is promising. The MACD oscillator has moved above the zero line for a new outright buy signal.
In this daily Point and Figure chart of ADI, below, I see that the software is projecting the $185 area as a potential price target.
In this weekly Point and Figure chart of ADI, below, I see a bearish chart with a downside price target of $141. Big difference from the daily chart above.
Bottom-line strategy: If I step back a few feet from my laptop screen I am encouraged about the charts of ADI. If I look closely at things I grow cautious with the downside price target on the weekly Point and Figure chart a concern. Let's put ADI on a list of stocks that look promising and return to the drawing board in several weeks.
