Jim Cramer recently highlighted National Oilwell Varco (NOV) as one of 10 companies that could be acquired in 2017, saying the stock "used to be so much higher. I don't mind if this one gets bought." He sees NOV as attractive to the $32 billion joint venture that General Electric (GE) and Baker Hughes (BHI) recently announced, but let's look at National Oilwell Varco's technicals.
NOV has bottomed and looks to be headed significantly higher. Potential consolidation in the industry would probably mean our price target is reached sooner than later. Let's check the base and see how far it projects:
If we concentrate more on the price action and pay less attention to the volume pattern we are very bullish on NOV right now. This 12-month daily chart of NOV is breaking out now! NOV is above the rising 50-day and 200-day moving averages. The Moving Average Convergence Divergence (MACD) oscillator is in a new buy mode above the zero line.
The only indicator on this chart that is not (yet) in gear with the price action is the On-Balance-Volume (OBV) line. The OBV line has been moving sideways with the price action since May. It would have been nice if it broke out on the upside ahead of today's break breakout but we'll set for a belated confirmation.
In this three-year weekly chart of NOV, above, you can see that prices have been bottoming since late 2015. NOV is slowly making higher lows and is above the rising 40-week moving average line.
While the daily OBV line is not yet in gear, this weekly OBV line is moving in the right upward path and confirms the price strength with more volume being traded in NOV in weeks where NOV closes higher.
The trend-following MACD oscillator is in a bullish mode above the zero line.
If you are not sure about the upside breakout for NOV on the daily chart, this Point and Figure chart, above, just broke out and the $55 area is the price target. Traders should risk below $35 on new longs.