Diversified chemical company FMC (FMC) has retraced two-thirds of its big rally from its 2009 low and could start the bottoming process.
In this long-term chart of FMC, above, we can see the big rally from the 2009 low and the big decline.
Notice in the bottom panel of this monthly chart the extreme oversold readings from the stochastic indicator (an overbought/oversold indicator). These are the most oversold readings in over a decade and suggest that prices are washed out here.
In this short-term chart of FMC, above, we have a couple more positive clues.
In the past four to six weeks, the volume of trading in FMC has been heavy. Selling interests and buying interests have been matched because prices have stabilized.
Also, we are seeing a bullish divergence between the lower lows in prices for FMC and the equal lows in the momentum study. Higher lows would be more bullish, but equal lows are still a bullish divergence.
From here, we would anticipate more sideways price action in FMC. Some sideways price action could precede a better markup in the months ahead. A close below $31 would prompt us to reexamine our thoughts.
