Emerson Electric Co. (EMR) has been trading sideways the past six months largely between $66 and shy of $75 but beneath the surface our technical indicators have strengthened. Let's see how the charts look and how we might time some purchases.
(For more on EMR, see "The Name of the Game Is Growth: Cramer's 'Mad Money' Recap")
In this updated daily bar chart of EMR, below, we can see how prices made a strong rally from November to January before the current trading range.
Prices have crossed above and below the 50-day moving average line but the 200-day moving average line has stayed bullish the entire time. Prices successfully tested this line in early April and early May.
Now look at the rising On-Balance-Volume (OBV) line - it continues to rise even during EMR's sideways trend. I think this is a very bullish observation and suggests that prices will eventually break out to new highs.
The Moving Average Convergence Divergence (MACD) oscillator has been crossing above and below the zero line all year which matches the neutral price action.
In this weekly bar chart of EMR, below, we can see that the 40-week moving average line has had a positive slope since early 2016.
The weekly OBV line has been strong since November and confirms the price gains.
The weekly MACD oscillator has been above the zero line the past two years.
In this Point and Figure chart of EMR, below, we can see a downside price target of $65.45. A rally to $74.46 would be a very bullish development.
Bottom line: If you are looking to go long EMR I would suggest that after a successful test of the 200-day line at $68 risking to $65. Otherwise wait for a breakout over $74.
(Emerson Electric is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells EMR? Learn more now.)
