During the fast-paced "Lightning Round" segment of Mad Money Wednesday evening, one caller asked Jim Cramer about the Mexican cement company Cemex (CX) : "This is always a cheap stock that never seems to recover. I'd buy a little at $6 a share," was Cramer's advice.
Let's check out the charts of CX.
In this daily bar chart of CX, below, we can see prices are starting to weaken after a year-long rise. CX just broke below the rising 50-day moving average line. The On-Balance-Volume (OBV) line is rolling over telling me that sellers of CX are becoming more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has turned lower and is close to the zero line.
In this first weekly Japanese candlestick chart of CX, below, we can see a recent bearish engulfing pattern - a reliable top reversal pattern. Prices are edging lower but are still above the rising 40-week moving average line.
The OBV line shows a new "down-tick" and the MACD oscillator has narrowed towards a bearish crossover.
In this long-term weekly chart of CX, below, we can see that prices have been in a huge base pattern since 2009. This is some old resistance on the chart in the $10-$12 area but it may not amount to much selling resistance.
In this daily Point and Figure chart of CX, below, we can see a potential price target in the$18.25 area.
In this weekly Point and Figure chart of CX, below, we have a lot more price data and have a $17 price target.
Bottom line strategy: CX has started a correction. It could extend down to the $4.50 area. Wait for a consolidation pattern before probing the long side. A long-term break out over $10-$12 could yield impressive gains at some point in the future.
