The stock price of the J.M. Smucker Co. (SJM) has soared sharply in recent sessions. Is this the start of a new uptrend or will it be doomed to be another rally in a longer-term downtrend? To try to answer those questions let's review the charts and indicators.
In this daily bar chart of SJM, below, we have some positive clues to review. SJM has rallied sharply above the now-flat 50-day moving average line. Prices are still below the declining 200-day line. Volume has increased so far this month, but the On-Balance-Volume (OBV) line has not moved up very much, suggesting that buying has not been all that aggressive. In the lower panel is the 12-day momentum study, which shows higher momentum lows from September to October to November compared to lower price lows. This condition is a bullish divergence and tells us that the decline slowed into the November low.
In this weekly chart of SJM, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line is neutral and the MACD oscillator is close to a cover-shorts buy signal.
In this Point and Figure chart of SJM, below, we can see the sharp advance and a possible upside price target of $150-$151.
Bottom line: Is the long decline in SJM over? Maybe. Could SJM continue to climb sharply? Maybe, but a correction, dip or pullback is likely at some point. SJM is likely to find some resistance in the $120-$125 area and it would be healthier for the stock to pull back and make a better and more-durable base pattern.
