Autodesk (ADSK) makes software for architects and structural project planners -- software for designers of towering skyscrapers and the smallest handheld devices alike. The company is thus positioned to benefit from infrastructure spending on roads, tunnels and bridges, as well as development in urban America.
Autodesk reports earnings after the closing bell on Tuesday, and analysts expect it will report a quarterly loss of 42 cents a share. Of interest to investors will be guidance for its Forge platform, which simplifies project collaborations.
Let's see what the charts say.
The daily chart shows that the stock has been above a "golden cross" since April 18 and that its 200-day simple moving average provided buying opportunities between June 24 and July 11. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. Investors should consider buying weakness to the 200-day simple moving average when a stock is above a "golden cross."
The weekly chart shows a red line through the price bars, marking the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average, the "reversion to the mean."
The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicate overbought and readings below 20.00 indicate oversold.
A negative weekly chart shows the stock below its key weekly moving average, with weekly momentum declining below 80.00 in a trend toward 20.00. A positive weekly chart shows the stock above its key weekly moving average, with weekly momentum rising above 20.00 in a trend towards 80.00.
Here's the daily chart for Autodesk.
Courtesy of MetaStock Xenith
Autodesk closed Monday at $75.18, up 23.4% year to date. It is in bull market territory, a whopping 80.7% above its Feb. 9 low of $41.60. The stock is 4.3% below its all-time intraday high of $78.58, set on Nov. 17.
The key to timing when to buy the stock based upon the daily chart is pattern recognition and having value levels at which to buy on weakness. Then, you trade the pattern as it develops.
Autodesk traded as low as $41.60 on Feb. 9. My key levels for all of 2016 were $41.76 and $34.95, and the first was thus tested.
Then you look for a positive technical signal to fortify your decision to buy this stock. This occurred on April 18 with the "golden cross" shown on the chart, where the 50-day simple moving average rose above the 200-day simple moving average. Then, on June 24, the stock traded below its 200-day simple moving average of $55.44, which was a buy level for the stock. The stock continued higher all the way to its all-time intraday high of $78.58 on Nov. 17. Along the way, the stock reached my key semiannual level of $76.08, where positions could have been reduced.
Here's the weekly chart for Autodesk.
Courtesy of MetaStock Xenith
The weekly chart for Autodesk is positive but overbought, with the stock above its key weekly moving average of $73.04. The stock is well above its 200-week simple moving average at $52.74, last tested during the week of Feb. 19 when this "reversion to the mean" was $46.81. The weekly momentum reading is projected to slip to 82.87 this week, down from 83.96 on Nov. 25, sliding above the overbought threshold of 80.00.
Investors looking to buy Autodesk should do so on weakness to $62.89, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should consider selling strength to $76.08, which remains a key level on technical charts until the end of 2016.