Cummins Inc. (CMI) has not been reviewed since late May, when I wrote: "CMI might trade sideways in the $154 to $161 area for a while longer, but fresh highs are likely in the weeks ahead. Traders could go long on a close above $161 and then risk below $152 looking for gains to the $195 area." With CMI now trading just $10 short of our $195 price target, a fresh look at the charts and indicators seems like a good idea.
In this daily bar chart of CMI, below, we can see an uptrend the past year with rallies and corrections. The current rally on CMI started in late November. Prices are above the rising 50-day moving average line and the rising 200-day line.
The 200-day average was tested successfully in August and November. The daily On-Balance-Volume (OBV) line has been rising since August and tells us that buyers of CMI have been more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is well above the zero line, but the two moving averages that make up this indicator have narrowed and could soon cross to the downside to signal a take profits sell.
In this weekly bar chart of CMI, below, we can see a two-year rally where prices have more than doubled from their lows. Prices are above the rising 40-week moving average line.
The weekly OBV line has been rising the entire time, and confirms the advance with signs of accumulation and aggressive buying. The weekly MACD oscillator is above the zero line and recently turned upwards for a fresh outright go long signal.
In this Point and Figure chart of CMI, below, we can see a possible longer-term price target of $228.
Bottom line: CMI is still pointed up, with price targets of $195 and $228. Traders should use a sell stop below $170 and investors below $160.