3M Co. (MMM) was been weak since making a two-day reversal at the end of January despite what I saw on the charts. When you really miss on a forecast it is best to come clean. I wrote that, "My charts of MMM do not show a pattern of distribution and they do not show a reversal pattern at this time. Without some signs of selling or some bearish divergences I cannot currently make the case for declines below the $240 area -- nearby support."
With hindsight (see the first chart below) we can see that support at $240-$235 and at $225 were all broken in just a few short days. The slope of the 50-day average turned negative and the rising 200-day moving average line was tested in early February. There is more to point out.
In this daily bar chart of Action Alerts PLUS holding MMM, below, we can see some mixed signals. Prices are still below the declining 50-day average but also below the cresting 200-day line. A rally back above $225 would put MMM back above the 200-day line. Since November the daily On-Balance-Volume (OBV) line has been moving sideways; sideways as MMM rallied and sideways as MMM has declined the past two months. From November to January this flat OBV line was a negative and during the declining phase it is more of a positive as we are not seeing sellers being more aggressive.
In the lower panel is the Moving Average Convergence Divergence (MACD) oscillator. The indicator is bearish but we could see a cover shorts buy signal in the near future. One more point about support is the $200-$215 area from June through September -- this area might attract buyers again.
In this weekly bar chart of MMM, below, we can see that prices closed below the cresting 40-week moving average line last week and is below the line this week. The weekly OBV line peaked in January and has weakened signaling more aggressive selling on this time frame. The weekly MACD oscillator is in a bearish mode heading down toward the zero line.
In this Point and Figure chart of MMM, below, we can see a possible downside price target of $189. The volume at price bars on the left side of the chart shows that some decent volume has been transacted below the market. This prior pocket of volume may slow the decline.
Bottom line: Because sellers have not been that aggressive (on the daily chart) MMM may hold around the $215 area but our Point and Figure chart shows that a downside target of $189 is possible. Traders will have to be more nimble and investors more flexible in the next few months.