Over the past 12 months shares of Clorox (CLX) have largely ignored the downside swoons of the broad market, but the price action recently has made me a little nervous.
Clorox rewarded its stockholders last year with an enviable uptrend (see the chart above). Prices bounced off the rising 200-day moving average line in June and September, and both of these times turned out to be attractive and successful buying opportunities. CLX retested the 200-day line last month, but the jury is still out on whether this was another timely buy. In the past five weeks CLX tested the downside and the upside, first by breaking below the lows of the past four months but managing to hold the 200-day line. The other day CLX gapped higher and pushed temporarily above nearby resistance at $130. The On-Balance-Volume (OBV) line made a new high to confirm the price strength but the failed "up thrust" is what economists call "on the other hand."
This longer-term weekly chart of CLX, above, gives me pause. You can see how dips to the rising 40-week moving average line have been buying opportunities, and you can see the rising OBV line. The declining Moving Average Convergence Divergence (MACD) oscillator is the rub, or problem, with the bull case.
The best way to decide this bull/bear issue is to let prices decide. I would follow a strong close above $133 on CLX, and I would become bearish on a close below $123. Fingers crossed that we don't get whipsawed by a false signal.
