Campbell Soup Co. (CPB) was reviewed in December where I wrote, "Before the soup gets cold aggressive traders could go long CPB here risking a close below $46. Traders looking for more evidence should wait for a close above $52 -- the 200-day average line -- to go long and then risk a close below $48." We are now approaching the middle of February and aggressive traders may have been stopped out below $46 or have been standing aside because CPB has not closed above the 200-day line. A number of bullish technical signals on CPB are again suggesting that we probe the long side of CPB.
In this updated daily bar chart of CPB, below, we can see that dips or probes below $46 were bought in January but the dip this month went deeper. The slight new low in prices has created some bullish divergences on the charts. Trend-wise, prices are below the declining 50-day moving average line and the declining 200-day line.
Prices made a new low for the move down but the On-Balance-Volume (OBV) line has not made a new low below the low made in September. The 12-day momentum study in the lower panel also shows equal lows in January and February, which is a bullish divergence to the lower price lows.
In this weekly bar chart of CPB, below, we can see three "legs" lower from the zenith at $68 back in 2016. The current leg lower is the shortest in duration and distance traveled and tells me that prices have reached a level where investors with foresight are interested in buying CPB. Prices are below the declining 40-week moving average line but a close above $50 will change that.
The weekly OBV line is still in a declining phase. The weekly Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts buy signal in November and while it has narrowed towards a possible bearish crossover it has not yet happened. Stronger prices in the short-run should turn the MACD oscillator back to the upside.
In this Point and Figure chart of CPB, below, we can see that prices reached a $46.11 price target and declined to a low of $43.51. A rebound has happened and a rally above $48 will make it look like the recent decline was a bear trap.
Bottom line: Sticking with a strategy of buying strength, aggressive traders could go long CPB on a close above $48 or above $50, risking a close below $44.