3M (MMM) has had a good run from its 2009 low, but prices look stretched on the upside this year and some overbought readings and momentum divergences suggest a cautious stance in the short- to intermediate term. Here's what has caught our attention on the charts.
In this daily chart of MMM, above, we can see that prices are above the rising 50-day and 200-day moving averages. That's good. There are no bearish divergences between the price action and the momentum study in the lower panel. That is also positive. The On-Balance-Volume (OBV) line has moved up with the price action, signaling that buyers have been more aggressive and longs have added to positions.
Now look at the movement of the slow stochastic indicator (an overbought/oversold indicator). There is a bearish divergence between the higher highs for MMM in July and the lower high and crossover of the stochastic. On the downside, the best nearby chart support for MMM is down around $170 where prices stalled for a while on the way up.
In this weekly chart of MMM, above, we see that the trend is still very much up with prices above the rising 40-week moving average line. The weekly OBV line is also pointed up. The weekly stochastic indicator is at an extreme and poised to cross over to the downside. In the lower panel is the 12-week momentum study, which shows a bearish divergence vs. the strength seen in April.
So we have bullish signals and bearish signals, certainly not a black or white picture. Bottom line? I would raise sell stop protection on MMM to lock in a profit, and/or take some money off the table. Paper profits are good, but booked profits are even better.