Comcast Will Give Some Back
Published May 30, 2017
Comcast (CMCSA) has been in a bullish trend since January 2016. During this course of this trend, the stock has moved down after hitting resistance. The stock is currently at this point of resistance and should follow suit by moving down. Near-term downward movement is outlined below.
When we take a look at other technical indicators, the relative strength index (RSI) is at 72.7044. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI is near overbought levels. The last two times the stock spike up to its current resistance trendline, the RSI was also at similar levels the stock was at on May 30. Both of these resistance and RSI indicators led to a 4% drop for the stock. This is the first indicator of potential near-term downward movement.
The true strength index (TSI) is currently 18.8524. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The TSI has been trending up, and there is no telling where its future direction shall go.
The positive vortex indicator (VI) is at 1.2278 and the negative is at 0.7091. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. These indicators have currently spiked favorably to the upside. This won't last forever, but as long as the positive stays above the negative this could slow any drop in the stock.
The stochastic oscillator K value is 91.0208 and D value is 95.4541. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. This indicator is clearly overbought. The last four times this indicator reached this point the stock fell. Similar to the RSI analysis above, This overbought level led to a 4% decline in the stock over the following weeks and the same is expected in our current case. This is the second indicator of potential near-term downward movement.
The stock is at its resistance point, the RSI and stochastic are flashing overbought. These three indicators have been accurate when occurring together during the stock's year and a half bull trend. Natural up and down movement is common in any bull or bear trend. The stock has a history of bouncing off its current resistance level down to one of two support levels before moving up again. The solid yellow line support on the bottom may not occur this time, but the dotted white line is very plausible.
Considering the RSI, TSI, VI and stochastic levels, the overall direction favors a move to the downside. Based on historical movement compared to current levels and the current position, the stock could drop at least 3% over the next 32 trading days if not sooner.
DISCLOSURE: I currently do not have positions in the stock mentioned above. I may enter a position within the next 72 hours. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. Make sure appropriate research is conducted prior to taking any risk in a marketplace.