Cummins (CMI) has rallied over the past year and probably has further to go on the upside, but a brief period of sideways consolidation could be what we may have to navigate in the short-term.
In this one-year daily chart of CMI, below, we can see the trend of prices is definitely up. Prices are above the rising 50-day and 200-day moving averages.
The On-Balance-Volume (OBV) line rose with the price action from March to November but the line has turned flat since and has not (yet) confirmed the new price highs with a new high of its own. This divergence between the price action and the OBV line is not serious but it does require monitoring as we move forward. In the lower panel is the 12-day momentum study. As prices made higher highs in November, January and February the momentum study made lower highs. A flat OBV line and weakening momentum gives me pause about buying or increasing longs at this point in time.
This weekly chart of CMI, above, does not show the short-term concerns of the daily chart. CMI is above the 40-week moving average line. The weekly OBV line, unlike the daily line, is pointed up and could soon make a new high. The trend-following Moving Average Convergence Divergence (MACD) has been bullish since April and is still in a positive configuration.
In this Point and Figure chart of CMI, above, we only look at the price action. We ignore indicators and momentum and just look at price. Prices have broken out over the high of 2014 and we have an upside price objective/target of $171.
Bottom line: In the short run we anticipate that CMI could trade sideways for a while. When we see signs that buyers are getting more aggressive with a rising OBV line, we'll suggest buying CMI or increasing your long position. Meanwhile, I would hold longs risking below $140 for traders and below $135 for investors.