Emerson Electric (EMR) was upgraded to Buy at the TheStreet's Quant Ratings this morning.
The price chart, below, shows a small double bottom pattern, but we anticipate a short-term correction before more upside attempts.
In the daily bar chart of Emerson Electric, above, we can see the twin lows in late September and mid-January. Prices broke out above the rally high between these lows at $50 in early March. The height of this double bottom gives up an upside price target near $60, but the rally is stalling.
The slope of the 50-day moving average line is positive but the 200-day line is still declining. The On Balance Volume line improved in February but has rounded over since early March, even as prices advanced.
In the lower panel, the momentum picture is showing equal highs in February and March even though prices moved higher. This is a bearish divergence and puts us on guard for a pullback toward support around $50.
The longer-term chart of Emerson Electric, above, also gives us some pause about going long at current levels. While prices have rallied above the 40-week moving average line, the slope has not turned up. The OBV line picked up the last two months on this weekly time frame but is well below its early 2015 peak. Traders should wait for a better entry point.
