Emerson Electric (EMR) has been shaping up nicely on the charts. Prices turned up in early November and recently made new highs for the move up this month. What might we look forward to in the new year? Let's check the charts and indicators.
In this daily chart of EMR, above, we can see a sideways consolidation from March through November. Recently, in December, prices have pushed up to new highs.
During the nine-month sideways market, prices crisscrossed the 50- and 200-day moving averages. In early November prices turned up above the now-rising 50- and 200-day averages. The daily On-Balance-Volume (OBV) line rises gradually from a January low but it has yet to break out to a new high like prices have. In the lower panel is small bearish divergence as prices made higher highs in November, and so far into December the momentum study made a lower high. This divergence tells us that the pace of the advance has slowed. Prices are still pointed up, but a slower pace to the rise suggests caution by buyers.
This three-year weekly chart of EMR, above, suggests higher prices lie ahead. EMR is above the rising 40-week moving average line. The weekly OBV line is steady and the weekly Moving Average Convergence Divergence (MACD) oscillator recently turned up above the zero line for a new outright go long signal.
Bottom-line thoughts: EMR might chop around in the $59 to $56 area but it is likely to move higher in the weeks and months ahead. I would use available price weakness to do some buying, risking below $53 for now. Keep an eye on the OBV line to see if it can make a new high.
