The price chart of Lowe's (LOW) has turned to the upside in recent weeks, as the animal spirits have returned to Broad and Wall Streets. LOW is a fair distance below its 52-week high, so let's check on the charts and our indicators to see how much LOW can deliver.
In this daily chart of LOW, below, we can see both the decline from the July zenith to the bottom last month. As LOW declined, it gaped lower and generated a death cross of the 50-day and 200-day moving averages. One positive on the three-month decline was that the On-Balance-Volume (OBV) line did not decline that much. There was selling, but the OBV line did not make a new low in October as prices made new lows for the move down.
In November, LOW dips three or four times below $66, which seemed to attract buyers. Another positive was the bullish divergence between the lower lows in price in September and November and the higher lows from the momentum indicator. Prices have rallied above the now-flat, 50-day moving average line and above the rising, 200-day line. The OBV line is inching higher, but has not made a new high for the year.
This three-year weekly chart of LOW, above, is interesting in what it shows and doesn't show. LOW has been stuck in a large sideways trading range for two years. Prices have just closed back above the slightly rising, 40-week moving average line.
The weekly OBV line peaked in early 2015, and it declined faster since this July. The weekly Moving Average Convergence Divergence (MACD) oscillator has just crossed to a cover-shorts buy signal. LOW has some chart resistance above $80. It could challenge the resistance above $80 in the weeks ahead, but we are likely to see some sideways trading the near term and intermediate term before an upside breakout.
