A fundamental analyst at a major sell-side firm raised their rating on shares of SJW Group ( SJW) to "overweight" with a $67 price target. Regular readers of my articles on Real Money know that while I do pay attention to what fundamental analysts are saying I do not always agree with their conclusions.
Let's check the charts of this parent of San Jose Water, to see if I agree or disagree in this case.
In the daily bar chart of SJW, below, we can see that the shares have turned lower from a choppy sideways pattern. Prices are trading below the declining 50-day moving average line and the declining 200-day moving average line. The trading volume has increased since the middle of January telling us that traders are voting with their feet with an increase in activity on the decline.
The On-Balance-Volume (OBV) line has been declining since the beginning of this year and tells me that sellers of SJW are being more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In the weekly Japanese candlestick chart of SJW, below, we see a bearish setup. Prices are trading below the now declining 40-week moving average line. The weekly candle pattern shows a large red candle that is testing/breaking the lows of 2021.
The weekly OBV line has recently turned lower. The MACD oscillator is bearish as it just moved below the zero line.
In this daily Point and Figure chart of SJW, below, we can see a potential downside price target in the $51 area.
In the weekly Point and Figure chart of SJW, below, we can see the $46 area being projected as a potential longer-term price objective.
Bottom-line strategy: The charts of SJW are bearish and do not fit with a fundamental upgrade. It happens. I like to see the fundamental story and the technical picture to be in agreement. Right now that is not the case and thus I would avoid the long side of SJW.
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