Ciena Corp. (CIEN) is expected to report earnings results this coming Monday before the market opens. The report will be for the fiscal quarter ending January 2023. The company is a leader in optical and routing systems, services, and automation software.
There have been some market rumors that the company could be the target of an activist fund but let's check the facts of price and volume from the marketplace.
In the daily bar chart of CIEN, below, I see that the price action is mixed. CIEN is currently trading below the 50-day moving average line but above the 200-day line. There was a strong upside price gap in early December accompanied by heavy trading volume but that price gap has been filled.
The On-Balance-Volume (OBV) line shows weakness the past two months telling me that sellers of CIEN have been more aggressive than buyers. The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory but poised for a cover shorts buy signal.
In the weekly Japanese candlestick chart of CIEN, below, I see a number of bearish clues. The shares are trading above the 40-week moving average line but the slope of the line is still negative. I see several upper shadows in the past three months telling me that traders are rejecting the highs and telling me that the path of least resistance could be lower.
The weekly OBV line has been in a three-year downward path. The MACD oscillator tried to move above the zero line in January but that move seems to have come to an abrupt end.
In this daily Point and Figure chart of CIEN, below, I can see a potential downside price target in the $40 area.
In this weekly Point and Figure chart of CIEN, below, I see the same downside price target of $40 as the daily chart above.
Bottom-line strategy: If an activist investor has been building a long position in CIEN it is hard to tell. Putting aside rumors, the charts and indicators suggest further price weakness ahead.
