A Death Cross Looms for Clorox

 | Oct 12, 2017 | 8:33 AM EDT
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Clorox Co. (CLX) has been giving us mixed or conflicting technical signals, when it comes to volume. We reviewed the charts last week, and came up with this approach: "Bottom line: the daily OBV line should be moving lower with the price action on CLX, but that is not the case. If we ignore the OBV line we would want to trade CLX from the short side. CLX could see a $134 to $128 trading range until it decides on its next sustained move."

Jim Cramer mentions Clorox in an article on Thursday morning contrasting the performance of Procter & Gamble PG with that of other stocks in the same sector. 

Looking at an updated CLX chart, below, we can see that prices have stayed in that $134-$128 range -- actually, tighter than that. Let's take a fresh look at the charts this morning to see if the volume conflicts are still there.

In this daily bar chart of CLX, above, we can see that prices remain below the declining 50-day moving average line and below the rising 200-day line. The 50-day line is now closer to crossing below the 200-day line for a possible or potential dead cross. It may or may not happen, depending on the price action the next few weeks.

Volume has remained on the active side compared to the levels seen in August and early September. Many times over the years when I have seen busier volume at a low it has meant that there are just as many buyers of the stock as there are sellers. That could be the case now, but I am not that sure.

The daily On-Balance-Volume (OBV) line has edged higher in the past week. The 12-day momentum study in the lower panel of this chart shows lower lows in momentum, so we do not have a bullish divergence to focus on for a possible rally.

In this updated weekly chart of CLX, above, we can see that prices are still below the rising 40-week moving average line. The weekly OBV is still flat and the Moving Average Convergence Divergence (MACD) oscillator is nearly back down to the zero line. Crossing below the zero line would be an outright sell signal.

This updated Point and Figure chart of CLX, above, shows a downside price target of $116.51. A decline to $126.18 would be a new low for the move down and is likely to precipitate further declines.

Bottom line: one week later from our last review of CLX, we do not have all that more clarity but a move above $133 is likely to be positive while a decline below $127 is likely to be bearish.

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