Texas Instruments: Bearish Then, Bearish Now

Wednesday morning Texas Instruments (TXN) posted a small earnings beat and a beat on revenue, but guided below fourth-quarter consensus. TXN is lower in early trading Wednesday, so let's check on the position of the charts and indicators.

In the daily bar chart of TXN, below, we can see that the shares have made lower highs since December. TXN also made lower lows into early July. The pattern of lower lows was (so far) disrupted by a slightly higher low in October. A new low for the move down could happen in November or December. TXN is trading below the declining 50-day and the bearish 200-day moving average lines.

The On-Balance-Volume (OBV) line has moved up and down with the price action. The Moving Average Convergence Divergence (MACD) oscillator is crossing to the upside for a cover shorts buy signal. This signal could get reversed in the days ahead.

In the weekly Japanese candlestick chart of TXN, below, we can see a large rounded top pattern playing out over the past two years. TXN is trading below the declining 40-week moving average line. The most recent candle pattern shows an upper shadow telling us that traders are rejecting the highs.

The weekly OBV line shows weakness from March. The MACD oscillator is bearish.

In this daily Point and Figure chart of TXN, below, we can see an upside price target but the latest price data is not plotted. A trade at $149.43 or lower is likely to turn this chart bearish.

In this weekly Japanese candlestick chart of TXN, below, we can see a downside price target in the $139-$138 area.

Bottom-line strategy: We were bearish on TXN in our July 5 review and we are bearish on TXN now. Avoid the long side of TXN. A better buying opportunity is likely in the months ahead.

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