Hewlett-Packard's Powerful Breakout Has Failed

NEW YORK (TheStreet) -- Hewlett-Packard  (HPQ) finished last week below a key support zone. With the May high now far above current levels, the stock appears headed for a retest of its 2015 lows near $31.

Hewlett-Packard stock closed Friday at fresh June lows after a 1.15% decline. The breakout the stock had following its second-quarter earnings report has now been completely wiped out. Hewlett-Packard has fallen over 7% from its news-inspired peak on May 22 and may have much further to fall.

Hewlett-Packard left behind a solid support zone following its May 22 breakout.  The move after second-quarter earnings pushed the stock well past its April and early-May highs, while attracting the second-heaviest upside volume this year. 

This impressive surge showed signs of exhaustion almost immediately.  The next day, shares fell nearly 4% as they easily sliced through the May 22 breakout gap.  This support zone at $33.70 to $33.95, which also included the April and initial May highs, had zero holding power.  Hewlett-Packard has been listless since the May 23 drop.  Now it appears a new down leg has begun.

In the near term, H-P is headed for a retest of the 2015 lows.  The stock held this area in late March, following the Feb. 25 collapse.  Hewlett-Packard based here for two weeks, putting in its April low at $31 as well, before eventually mounting a healthy rebound. 

For patient Hewlett-Packard bulls, a return to this major support zone will provide a low-risk buying opportunity.  

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