Chart of the Day: Broadcom Shows Promise, but We're Cautious
We added Broadcom to the bullpen after earnings; here are the signals we're eyeing.
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Great earnings this past week from Broadcom AVGO. In fact, we saw a good enough response for us to bring this name to the Pro Portfolio's Bullpen.
The chart shows the stock has been volatile of late but a steady riser since the start of 2023. In fact, the top pane shows either blue (strongly bullish) or teal (cautiously bullish) candles for the past 20 months. That is some good strength, a powerhouse in the semiconductor space, a textbook pattern of higher-highs and higher-lows.
But after some rather volatile weeks in July and August, when the stock was pounded hard, there is now a lower-high in place.
Further, the Moving Average Convergence Divergence indicator, as seen in pane two, has rolled over, while momentum is weak, too.
Notice the turndown on the stochastics on the fourth pane, and a lower-high on that chart; it's not bullish. Lastly, money flow in the bottom pane is also weak, with lower-highs and lower-lows in the chaikin money flow.
We think there could be some more corrective action here and then some sideways movement when a low is in place, so we are not in a hurry to add shares as of yet. We'll watch this one from the sidelines.
