Deere & Co. (DE) has rallied strongly since last fall, including a big upside price gap in November. Prices have leveled off recently in what I see as a pause before they move still higher in the months ahead.
A review of the current state of the indicators gives us confidence to put forth higher price targets. Put your tractor in neutral and check out the charts below.
In this daily bar chart of DE, above, we can see a sideways consolidation pattern in May through October. In late October DE catches a bid and starts its rally. In September the slopes of the 50- and 200-day moving averages turn positive. There is one test of the rising 200-day average line in September and the 50-day line is tested in March and April. The daily On-Balance-Volume (OBV) line bottoms in August and climbs higher until early March. The OBV line is flat the past six weeks. The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since October and just turned up from the zero line again for an outright go-long signal.
In this weekly bar chart of DE going back three years, above, we see a cup or saucer-like bottom formation from August 2015 until October 2016. Prices broke out on the upside in late 2016 and have soared higher. DE is above the strongly rising 40-week moving average line. The weekly OBV line is positive and the trend-following MACD oscillator has narrowed toward another possible crossing and outright go-long buy signal.
In this Point and Figure chart of DE, above, we can see the long uptrend minus any price gaps. The recent consolidation pattern shows a fresh upside breakout and a $124+ price target.
Bottom line: Continue to trade DE from the long side, risking a close below $110. The $125 area is our initial upside price target.
