Hormel Foods (HRL) the maker of things like SPAM, was an outperformer on the upside in this ultra-long economic recovery, bottoming short of $6 in late 2008 and topping out recently in February over $45.
Prices have corrected and have been on the rise since June. What lies ahead as some sell-side firms have stepped in to upgrade HRL based on their view of the fundamentals?
In this daily chart of HRL, above, we can see a three-month decline/pullback from near $45 down to a touch below $34. Prices have since retraced approximately 50% of the decline and have turned soft again. HRL briefly broke above the rising 200-day moving average line in August and then failed at the underside of that same line earlier this month.
The slope of the 200-day average has begun to flatten as the month has progressed. The shorter 50-day average line has turned flat too. The On-Balance-Volume (OBV) line has moved up from its June low and supports the rally. The 12-day momentum study does not give us any positive or negative clues at the momentum.
In this three-year weekly chart of HRL, above, you can see the steady uptrend in 2014 and 2015. In the fourth quarter of 2015 HRL jumped 50% and prices moved more rapidly above the rising 40-week moving average line. Maybe the rally in HRL got ahead of itself and prices have since corrected. Prices have behaved similarly to the daily chart, with HRL failing at the underside of the now declining 40-week moving average line. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line, but the OBV line has gained ground the past four months.
This put HRL at a crossroad of sorts. Prices look like they are rolling over, but the volume statistics are constructive. A close below $36 will keep the bear in control, but a close above $40 is needed to awaken the bull.