I cannot “confirm” that you should buy AFRM

Affirm Holdings (AFRM) is a financial lender that provides installment loans that consumers can use at the point of sale to fund a purchase. The stock went public in January 2021 and we reviewed the stock on Nov. 16, where we wrote, “In our Sept. 30 review, we recommended that “initial stops raise to $105 from $69. Our price targets are $165 and then $189.”

I’m hoping traders took some profits at $165 or higher. Raise the stops on your remaining longs from $105 to $135.” Prices hit our stop level in the second half of November, requiring traders to exit their remaining longs.

Let’s look at AFRM again.

In this AFRM daily bar chart below, we can see that prices continue to fall into January. AFRM is trading below the 50-day falling moving average and below the 200-day capped line. The On Balance Volume (OBV) line is showing weakness from October, telling me that AFRM sellers have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is well below the zero line, but is approaching a cover-short buy signal.

In this weekly Japanese candlestick chart from AFRM below, we see a series of red candles, with a large red candle breaking below the 40-week moving average line. Trading volume has decreased, as has the weekly OBV line. The MACD oscillator is pointing down towards the zero line.

In this AFRM daily point and figure chart below, we see an upside target of $108, but we also see that resistance can be seen at $93 and above.

In this weekly AFRM point-and-figure chart below, we see a bearish target price as low as $9. Ouch.

Bottom Line Strategy: AFRM could make an oversold jump from $10 to $20 but the trend is down and no new base pattern has formed. I try to find trends worth buying and not jumps into downtrends. I would refrain from buying AFRM at this point in time.

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