Don't Ignore This Chart!

Weekly Candle Argues For Further Weakness Ahead For Oclaro

Tom Bowley

Tom Bowley

Chief Market Strategist, EarningsBeats.com

Oclaro Inc (OCLR) is printing several warning signals as it appears to be topping after a stellar advance.  OCLR has nearly quadrupled since the beginning of 2016, but it's difficult to ignore the heavy volume reversal last week - especially when you consider that a negative divergence has been in place on the weekly chart since highs printed in November.

That bearish engulfing candle was accompanied by over 60 million shares, suggesting a near- to intermediate-term top is in place.  To the downside, the October low near 7.00 and the rising 50 week SMA at 7.19 - a likely target given the negative divergence - could be the target now for the bears.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More