Sleepy industrial machinery company Nordson (NDSN) has been a great investment for individuals who may have been buyers in early 2016 around $55; but we need to be forward looking when it comes to investing. Let's check the latest charts and indicators to see what could happen in the next few weeks:
In this daily chart of NDSN, above, we can see that the rising 50-day moving average line has been a pretty good indicator of the uptrend on NDSN. Prices are still above the rising 50-day moving average line, but recent tests of that line suggest we could break it soon.
The On-Balance-Volume (OBV) line rose from May to February confirming the rally, but the line has turned lower since early March. A declining OBV line suggests that sellers of NDSN have become more aggressive, with heavier trading volume on days when the stock has closed lower.
In the bottom panel, the Moving Average Convergence Divergence (MACD) oscillator has been in a take-profits mode since mid-March and could soon cross below the zero line for an outright sell signal.
In this weekly chart of NDSN, above, we can see that prices are above the rising 40-week moving average line. The weekly OBV line was neutral until June 2016 and then it turned bullish. The MACD oscillator has been above the zero line since early 2016, but it has recently signaled a take-profits sell.
Bottom line: when you own a stock that has more than doubled, there is a reluctance to take profits. We hope it is going to go still higher, but hope is not an investment strategy. NDSN looks like it will correct to the downside - maybe back to $115 or $110 or even $105 where the 200-day moving average intersects. This might be a good time to nail down some profits.
