It has been a rough year for $WDC, very rough. At the Christmas week lows the stock was down nearly 70% from the 2018 peak and was working on its 9th straight lower monthly high. This ugly sell off was powered by three straight post earnings plunges, the largest coming immediately following the Oct. 25th Q1 report. $WDC fell over 18% the next day, its biggest one day drop in years.
Since the 12/26 lows $WDC has mounted a slight rebound. Is a significant bottom in?
The scoop: The last time $WDC was this far below its 40 week moving average was 1999.
Daily MACD has been tracing out a divergent low since late October(initial post earnings low).
Since the 7/27 flush(earnings) $WDC has been steadily trending lower in a rather narrow bear channel. At this week’s high the stock is challenging the upper band of this pattern.
We believe $WDC is showing signs of complete downside exhaustion ahead of its Q2 earnings report(Jan. 24/PM).
$WDC should be considered a low risk buy near current levels. Solid support is in place between $39.00 and $37.00. A close below $35.50 would undercut the December lows sending a clear sign that the bear channel remains intact.
On the upside a close above the 50 day moving average, which has controlled the highs since April, could spark quite a run. If so, initial target would be the huge 10/26 breakdown gap(earnings) near $52.00.
At time of publication we are long $WDC in some managed accounts.