We are paying another visit to Waste Management Inc. (WM) this soggy New York City morning. The last time we checked out the charts and indicators was in early August, where we said, "In this Point and Figure chart... There is an upside price target in the $87-$88 area...WM is in an uptrend and there are further upside price targets. I would trade WM from the long side risking a close below $71." With prices sprinting past $82 on Friday a fresh look at the indicators and the Point and Figure targets is our first collection of the day.
In this daily bar chart of Action Alerts PLUS holding WM, below, we can see a shake-out or sharp dip early this month as prices gaped down to temporarily break the rising 50-day moving average line. By the end of October WM was trading back above the 50-day line. The last time prices got close to the rising 200-day moving average line was May.
It is hard to see if volume has been expanding with the uptrend the past 12 months but the On-Balance-Volume (OBV) line has risen the entire time to show more aggressive buying and to confirm the advance. The trend-following Moving Average Convergence Divergence (MACD) has been above the zero line since early June and just turned up from the line for a fresh go long signal.
In this weekly chart of WM, below, we can see that prices have been above the rising 40-week moving average line since early 2016 -- consistently bullish! The weekly OBV line just made a new high to confirm the rally and the weekly MACD oscillator is in a bullish mode.
In this Point and Figure chart, below, we can see the uptrend from 2014 and the various consolidations along the way. A new upside price target is projected to the $98 area.
Bottom line: WM is clearly in an uptrend and we have higher price targets. The only question is where to add to longs and what to risk. WM might make a very short-term consolidation pattern like a flag or a pennant in the $82 area. Aggressive traders should use this temporary pause to add to longs. A close below $76 would break the short-term uptrend and that would be my risk level. On the upside we would set our sights on the $98-$100 area.