Tuesday night on Mad Money, Jim Cramer sat down with Hubertus Muehlhaeuser, CEO of restaurant equipment supplier Welbilt, Inc. (WBT) . They discussed the fundamentals of the restaurant business but what do WBT's charts and indicators look like? Let's check them out this morning.
In the daily bar chart of WBT, below, I can see some interesting developments with the On-Balance-Volume (OBV) indicator and the momentum study. WBT did make a peak in early January and declined to a new low earlier this month. Prices are below the declining 50-day moving average line and below the flat 200-day line.
What is really bullish, in my opinion, is the movement of the OBV line. The volume pattern is hard to read and interpret but the simple line of the OBV indicator tells me that over the past 12 months buyers of WBT have been more aggressive. They were more aggressive from last May to early January and they have been more aggressive from March to now even as prices have declined.
In the lower panel we can see a rising momentum pattern from March telling us that the pace of the decline into early May slowed. A decline slows mainly when buyers come in on a scale down to accumulate shares.
In this weekly bar chart of WBT, below, we do not have a lot of history to work with but we can see that prices are below the flat 40-week moving average line. The weekly OBV line shows a bullish pattern from June and the weekly Moving Average Convergence Divergence (MACD) oscillator has begun to narrow towards a potential cover shorts buy signal.
In this Point and Figure chart of WBT we can see the accumulation (a.k.a. buying) below $20. A trade at $20.63 will be a small upside breakout for this chart.
Bottom line: Traders could go long WBT on strength above $20 and $20.63, risking below $18 for now.