A funny thing happened on the way back from the grocery store -- Colgate-Palmolive (CL) made a bottom formation that could support an intermediate-term rally.
Let's go shopping.
In this daily chart of CL, we can see a rally and then a lengthy decline. The decline looks like it has three legs, or waves, lower. The first decline is quick and short in September. The second move down is from October to early December. The last push down happens quickly in January with a gap down, a new low and very heavy volume.
Prices of CL have since recovered a bit with gains above the flat 50-day moving average line. The On-Balance-Volume (OBV) line declined from July to early December as sellers dominated, but the OBV line has improved from early December. In the bottom panel, we can see a bullish divergence between the lower lows in price from November and January and the higher lows in momentum.
In this three-year weekly chart of CL, above, we have some positive signals to consider. CL is below the declining 40-week moving average line, but notice that the weekly OBV line is starting to improve. The Moving Average Convergence Divergence (MACD) oscillator is poised to cross to a cover-shorts buy signal.
Bottom line: The price action since November does not look like an orthodox or classic bottom pattern, but I think CL has the ability to rally from here. The base may become wider, so I don't think we have to rush to get long, but a close above $69 is a signal I would follow.