Shares of Charles Schwab Corporation (SCHW) got caught in the SVB Financial Group (SVIB) vortex in recent days. Prices plunged from around $80 to just $45 shares in just a few trading sessions. SCHW has bounced a bit but the $64,000 question is whether this stock is a buy, a hold, or still a sell after the recent steep decline.
Let’s see what we can glean from the charts.
In this daily bar chart of SCHW, below, I can see that prices were in a “free fall” in recent sessions and swiftly broke the June/July lows. Trading volume was huge (or should I say “HUGE”) and tells me that lselling was very aggressive. The daily On-Balance-Volume (OBV) line shows a decline from early February. The Moving Average Convergence Divergence (MACD) oscillator turned bearish in January and remains in sell territory.
In this daily Japanese candlestick chart of SCHW, below, I fail to see a clear bottom reversal pattern and bullish confirmation. Japanese traders would probably not be buyers of SCHW.
In this weekly Japanese candlestick chart of SCHW, below, I see a mixed picture.
Prices are in a downtrend below the declining 40-week moving average line. The most recent weekly candle pattern could be the start of a reversal pattern as it shows a rejection of the most recent lows. Bullish confirmation is needed and that will take time. The weekly trading volume is heavy. The weekly OBV line is weak. The MACD oscillator is about to cross below the zero line for an outright-sell signal.
In this daily Point and Figure chart of SCHW, below, I can see that the software is projecting a bearish downside price target in the $9 area. Ouch.
In this weekly Point and Figure chart of SCHW, I can see that a downside price target of $62 was met and exceeded.
Bottom line strategy: I have absolutely no special knowledge of SCHW and its operations. I have no relationship with investor Ron Baron who bought more shares of SCHW on the plunge. I will say that the number of brokerage firms that went under in the 1973-1974 bear market left a permanent impression on my investing psyche and it has left me gun shy about steep selloffs.
What am I suggesting? I would avoid the long side until the dust settles.
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