Do you like Broadcom (AVGO)? First…pick a timeframe. (April 14, 2017)
I want to look at Broadcom ( NASDAQ:AVGO ) today. Remember these two companies, Avago and Broadcom ( NASDAQ:AVGO ) merged a while back and this has been a great stock. Now, though, we will cut right to the chase, I don’t think you want to be buying this stock here because I think it has more downside to go. Thursday’s little reversal there, we saw a lot of stocks reverse in this way and technically very weak. Where it is a high-volume breakdown, below the key 50-day moving average, which had been support in the past even here, and then a rebound that didn’t even make it up to it. You can attribute that to whatever want as far as the overall market, whatever. All I know is this: This stock is still down below resistance here where all this supply is.
So I don’t think this is a stock you want to be into, particularly when you look at the weekly chart. Sure, look at this, lower left, upper right, it is definitely the stock I want to be in. Fine, I get it, I agree. But if you want to take action right now this isn’t your time. The time to take action is when it pulls back and then holds above the 200-day or the 40-week moving average. It is not doing that right now it is just kind of consolidating a little bit above 210.00 and looking pretty precarious.
So I look at this, any rallies up into here, as a selling opportunities. We can see our original buy signal for us was this breakout above congestion from a volatility squeeze. Then the company breaks out here, the stock breaks out here and I am pretty sure that was on earnings. The stock gaps up, it wasn’t that big of a gap but it was a gap and it gapped and crapped. So you look at this gap and then you look at this strong selling. Even though it closed higher than the prior day, really nice, it closed a percent higher, but this was selling, institutional selling taking profits.
So this to me is a really, really key development right here. And then of course you have this as well, you have got this. So this three volume spikes here are largely selling. Again, even the one which is green. And then now we get even more selling on Wednesday and then a weak little bounce on Thursday. I just say stay away from this stock; the fundamentals are really good. The fundamentals are really good. The company is doing great. But is that greatness already being priced into the stock? I don’t even think you need to go that far.
I think you just look at the weekly chart and say, “You know what? When this gets to $200.00 then I will take another look at it.” Or,”If it doesn’t get to $200.00, when it gets to late May or early June, I will take a look at it.” They report earnings on June 1st, so between now and then I wouldn’t look for a lot of big downside but I am just not looking for any upside; I think you can do better as far as entering this stock. Anyway, that is my take on Broadcom ( NASDAQ:AVGO ). Hope it works for you.