Symantec Corp. (SYMC) is the Stock of the Day at Real Money. It appears that Broadcom (AVGO) is still on a buying spree, with the chipmaker in talks to acquire security software vendor SYMC. Shares of the cyber security firm surged in after-hours trading on Tuesday following the news, and they are about 19% higher in premarket activity Wednesday.
Let's check out the charts from Tuesday's close.
In this daily bar chart of SYMC, below, we can use our imagination to "see" prices at a new high around $26. Not being a fly on the wall during these high-level talks, I do not have any specific knowledge of a price that the managements will agree on, nor if there is anyone else interested in SYMC.
Prices are already above the flat 200-day average line and the declining 50-day line. We should see a large upside price gap when prices open Wednesday. Interestingly, the On-Balance-Volume (OBV) line shows a rise from August while prices have shown a wide sideways pattern. Buyers of SYMC have been more aggressive for many months. The Moving Average Convergence Divergence (MACD) oscillator turned bullish at the end of June.
In this weekly bar chart of SYMC, below, we can see that prices could open around the highs of 2018. I doubt that CEOs look at charts the way I do, however, they are very aware of their stock price and typically in a deal they like a premium to the current price. So $28 looks like a good price level on the chart -- at least to me. Note the rising weekly OBV line and the cover-shorts buy signal from the MACD oscillator.
In this Point and Figure chart of SYMC, below, the software projected a $29.28 price target on Tuesday. Interesting!
Bottom line strategy: You can go long if there is still room on the upside when you read the fine points of the acquisition (cash or cash and stock, etc.) and you don't mind tying up your money until the deal closes.