We last covered Cummins (CMI) on April 18 and looked for prices to rally to $140. Prices reached $130 or so and now the chart pattern and indicators are looking weaker. In this current choppy market environment just ahead of the election, I would nail down some profits in CMI if you have them.
In this daily chart of CMI, above, we can see a few short-term negative signals. CMI just closed below the 50-day moving average line and the slope of the line has turned flat. The daily On-Balance-Volume (OBV) line has turned down, telling us that sellers of CMI have picked up the pace. The daily MACD oscillator has turned down and could soon cross below the zero line for an outright sell signal.
In this three-year weekly chart of CMI, above, prices are still above the rising 40-week moving average line. The $130 level is the start of a band of resistance from $130 to around $150. The weekly OBV line turned up in January but it has flattened out the past three months. More importantly, this chart shows a large bearish divergence between the higher price highs seen in April and August and the lower momentum readings in the bottom panel. Strategy: Nail down some profits on CMI here and consider re-buying the shares if we retest the $110-$105 area.