Time to Dim the Lights on Emerson Electric

If the $40 does not hold, then longer term, prices could revisit the $30 support level.
Stocks quotes in this article: EMR

Emerson Electric (EMR) was downgraded by TheStreet's Quant Ratings service and this highlights the bearish technical condition of EMR.

Shares of EMR peaked in May (chart above) and then had a deep decline. From an October low, EMR only had a modest recovery bounce and volume was not behind the rally. Without a pickup in the On-Balance-Volume (OBV) line, the charts is back down, flirting with support at $45. This support isn't looking so strong with the Moving Average Convergence Divergence (MACD) in a negative configuration and the 50-day and 200-day moving averages pointing down.

This longer-term chart of EMR, above, is not promising. Prices for EMR are below the declining 40-week moving average. On this timeframe the OBV line was declining for all of 2015, which signals a lot of selling/liquidation as volume was heavier on weeks when EMR closed lower. The MACD oscillator is bearish and below the zero line.

A break of $45 can mean a test of support from 2011 at $40. The older the support (or resistance), the less reliable it can be. The market has a memory but the farther back you go, the "fuzzier" it gets. If the $40 does not hold for EMR, then prices could revisit the $30 support level longer term.

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TAGS: Investing | U.S. Equity | Industrials

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