I gave Medtronic (MDT) a $90 price target when I last checked out the stock in December, and MDT rallied shortly thereafter to just shy of that level ($88) before reversing to the downside. But the stock began another rally in early April and recently touched new near-term high. Is this the start of a sustained move higher, or will buyers be disappointed again?
Let's check out the charts and indicators to see what they say. First, this daily bar chart shows a wide trading range for the stock. Buyers showed up in the $77 area in October/November and again in late March and early April. And on the topside, sellers have used the $88-$90 area to be more active:
But because prices have essentially moved sideways, the stock's moving averages have been whipsawed and largely unsuccessful over the past year. The daily On-Balance-Volume line (OBV) has been moving up and down without a sustained trend, although the trend-following Moving Average Convergence Divergence oscillator (MACD) did move above the zero line early this month for a outright "Go Long" signal.
However, this weekly bar chart illustrates Medtronic's bigger sideways movement, with prices crossing the 40-week-moving-average line a number of times over the past three years:
MDT is currently trading above the 40-week moving average, and this line is just slightly positive. The stock's weekly OBV line also shows a slight improvement since early April, although its longer-term trend has been heading downward. That said, Medtronic's weekly MACD oscillator recently crossed to the upside for a "Cover Shorts/Buy" signal and is almost above the zero line for an outright "Go Long" sign.
Lastly, MDT's point-and-figure chart shows that the stock made a slight new high at $88.19, with a nearby price target of $89.12:
The Bottom Line
Add it all up and the charts say that MDT has made a fairly large consolidation pattern that would probably give us a $100 price target in most circumstances. However, we're not seeing any confirmation of this from the OBV line.
So, while prices could break out to the upside and head higher, I'm reluctant to get involved.