Shares of Charles Schwab Corporation (SCHW) got caught in the SVB Financial Group (SVIB) vortex in recent days. The price fell from nearly $80 to just $45 a share in just a few trading sessions. SCHW has bounced back a bit, but the question at $64,000 is whether this stock is a buy, a hold, or still a sell after the recent decline.
Let’s see what we can get from the chart.
In this daily bar chart of SCHW, below, I can see that the price was in “free fall” in recent sessions and quickly broke the June/July lows. The trading volume was huge (or should I say “huge”) and tells me that the selling was very aggressive. The daily on-balance-volume (OBV) line shows a decline since early February. The Moving Average Convergence Divergence (MACD) oscillator turned bearish in January and remains in the sell zone.
In this daily Japanese candlestick chart from SCHW, I fail to see a clear bottom reversal pattern and bullish confirmation. Japanese traders will probably not be buyers of SCHW.
In this weekly Japanese candlestick chart from SCHW, I see a mixed picture.
The price is trading below the declining 40-week EMA. 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 will take time. The weekly trading volume is huge. The weekly OBV line is weak. The MACD oscillator is about to cross below the zero line for an absolute sell signal.
In this daily Point and Figure chart of SCHW, 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 the downside price target of $62 has been met and surpassed.
Bottom Line Strategy: I don’t have any specific knowledge about SCHW and its operation. I have no connection with investor Ron Barron, who bought more shares of SCHW on the dive. I would say that the bear market of 1973-1974 at several brokerage firms left a lasting impression on my investing psyche and it made me shy about selling heavily.
What am I suggesting? I’ll avoid the long side until the dust settles.
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