On big down days in the stock market, Jim Cramer told Mad Money viewers Monday night, you can always fall back on long-term bullish themes. Cramer said investors can "shop the drop" and pick up great stocks as they head lower, but only if they fit one of his 10 investable themes for 2021.
(See Jim Cramer: 10 Investment Themes I Like in 2021)
Cramer said healthcare will be a major theme in 2021, with stocks like AbbVie (ABBV) and CVS Health (CVS) both likely to be winners.
Let's check out the charts of ABBV.
In this daily bar chart of ABBV, below, we can see that prices corrected from the middle of July to late October before staging a sharp rally into early December. In the decline, prices closed below the 50-day and 200-day averages but in the upswing they closed above them and their slopes are positive.
The On-Balance-Volume (OBV) line made a low with prices in late October but it has only made a tepid recovery in November and December.
The Moving Average Convergence Divergence (MACD) oscillator corrected lower from early December but it has recently narrowed and could turn bullish again this month.
In this weekly bar chart of ABBV, below, we can see a large bottoming formation going back to early 2018. A "neckline" can be drawn along the $100 level and that highlights the upside breakout in November. Prices are trading above the rising 40-week moving average line.
The weekly OBV line has been improving since the bottom of the base or from August 2019.
The MACD oscillator is currently bullish.
In this daily Point and Figure chart of ABBV, below, we can see a potential upside price target of $132.
In this weekly Point and Figure chart of ABBV, below, we can see a potential longer-term price target in the $166 area.
Bottom line strategy: Traders could buy shallow dips in ABBV risking below $97. The $132 and then the $166 area are our price targets for 2021.
