Archer-Daniels-Midland Co. (ADM) was upgraded to a "Buy" rating today by TheStreet's quantitative service. Regular readers of Kamich's Korner have become accustomed to me blending the quantitative and technical approaches. Putting aside the quantitative approach for a second, we have not looked at ADM for a long time. ADM has moved up and down a couple of times in a $5 range the past three months but now looks ready to start a stronger move to the topside.
In this updated daily bar chart of ADM, below, we can see that ADM has worked irregularly lower the past 12 months but a turn higher seems to be happening since November. Today ADM is trading above the still declining 200-day simple moving average line and above the rising 50-day average line.
Looking at the rising On-Balance-Volume (OBV) line the past 12 months I get the impression that someone (or more than one) has been buying ADM into weakness and that ADM has fallen of its own weight. The math behind the OBV line says that the volume of trading has to be heavier on the days when ADM closes higher for the line to rise. The Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts buy signal in late November and crossed above the zero line in January for an outright go long signal.
We have some interesting developments in this weekly bar chart of ADM, below. Prices just moved above the declining 40-week moving average line. The weekly OBV line is turning up from a higher low than the June/July low and that signals to me that buyers on this time frame are acting more aggressively. The weekly MACD oscillator crossed to the upside in early January giving a cover shorts buy signal. A move above the zero line in the next few weeks would generate an outright go long signal.
In this Point and Figure chart of ADM, below, we can see an upside price objective of $47.60 and that a trade at $44.38 should be an important upside breakout.
Bottom line: The price action and indicators on ADM have improved since November and now our quantitative service rates it a "Buy". Traders could go lone ADM on a close above $44 and risk a close below $40.