FMC Is Still in an Uptrend But Momentum Has Slowed

 | Sep 08, 2017 | 3:48 PM EDT
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We were bullish on FMC Corp. (FMC) back in April when we said, "Currently FMC has an upside target of $82+, which will be a breakout over the 2014 highs. This anticipated breakout should give us higher upside price objectives. The bull is in charge of FMC, so we want to be a buyer. FMC might have a shallow and brief pullback and that should be used to buy. I would recommend a stop close only order below $69."

If you followed our strategy you would have participated in a nice rally as prices have reached $88. How do the charts look now and should we take some money off the table? Let's see.

In this daily bar chart of FMC, below, we can see the rally of the past twelve months. Prices are above the rising 50-day moving average line and well above the rising 200-day line. There is a volume surge in early April but overall the pattern of volume is not exciting. The daily On-Balance-Volume (OBV) line has a slight upward bias since April but you could also grade it as flat. A flat OBV line in a rising market is not supportive. In the lower panel is the 12-day momentum study shows a pattern of weakening momentum. When prices are making new highs but momentum is making lower highs the technical analyst calls that a bearish divergence.

In this weekly bar chart of FMC, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line is pointed up and confirms the rally. In the lower panel we can see another bearish divergence using a 12-week momentum study.

In this point and figure chart of FMC, below, we can see a further upside price target of $92.

Bottom line -- prices are still pointed up but with bearish divergences from our momentum indicator. I want to "be prepared" not in the Boy Scout sense but in the sell-stop sense. I would recommend raising sell-stops to a close below $81 (cancel the order below $69).

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