Clorox Offers Clean Solution for Strength

 | Apr 20, 2017 | 2:22 PM EDT
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Who needs sexy? Or high-tech or biotech? If you look at the price performance of Clorox  (CLX) over the past few years, you may opt for the tortoise instead of the hare. Clorox  made an interesting turnaround from September through January before the real strength took hold in February -- just look at the daily bar chart below.

CLX is within striking distance of new highs, so we need to see what price targets to forecast above the $140 level.

In this updated daily chart of CLX, above, we can see a sizable correction from July to November and then a recovery that recoups nearly all of the decline. The 50-day moving average line is broken in December as prices reversed to the upside. The slower 200-day moving average line is broken on the upside in February and it is not until early March that we have a golden cross of the 50-day moving average line crossing above the 200-day moving average line.

This month, CLX pulled back to the rising 50-day line and it has stayed glued to the line as it continues to rise. The daily On-Balance-Volume (OBV) strengthened from the November low but turned neutral at the beginning of March as prices dipped. CLX is likely to retest the $138-$140 area soon and we would want to see volume expand and for the OBV line to make new highs to confirm the rally. The trend-following Moving Average Convergence Divergence (MACD) oscillator is holding at the zero line and if prices trend higher the MACD oscillator should turn upward to a fresh outright go-long signal.

In this weekly chart of CLX, above, we can see staying long above the rising 40-week moving average line kept you in a winner from 2014 to the middle of 2016. The 40-week moving average line is neutral now, but a turn higher will be a good reason to go long or add to longs. The weekly OBV line only made a slight dip into November compared to how much prices declined. The OBV line could soon make a new high. The weekly MACD oscillator is bullish.

In this Point and Figure chart, above, CLX is in a down column (O's) but trades at $138 and $140 will be bullish and open the way to a price target of $195.

Bottom line: Go long CLX on a close above $138 and add on a close above $140. Risk below $132 for now.

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