NEW YORK ( TheStreet) -- Shares of Western Digital (WDC) - Get Report are off over 2% this morning, a drop that has pushed the stock well below its early April lows. This breakdown-type action, although on very light volume so far, looks fairly damaging and may spark a new leg lower.
WDC has been struggling since finishing off a powerful rebound in February. The stock shot up over 15% during the first three weeks of the month, falling just short of a retest of the January 2015 peak. In March the pullback gained steam, and as the month came to a close, WDC was deep into new low ground for the year.
In mid-March Western's 200-day moving average began to flatten as it capped a bounce off a retest of the February low. Another healthy rebound move last month failed at the 200-day as well, and as May began, this major long-term moving average had turned lower. For the first time since late 2012, WDC was trading below a declining 200-day.
This heavy pressure, along with a string of five straight lower monthly highs, puts WDC in a vulnerable spot. In the near term, WDC will very likely retest its 2015 low set last month just below $90. If shares return to an overbought reading, as per the moving average convergence/divergence, a low-risk buying opportunity will develop for patient bulls.
At the time of publication, Morrow was long XXX OR had no positions in the stocks mentioned.