Jim Cramer told his "Mad Money" viewers Tuesday evening that money managers are flocking to the recession stocks. These stocks are basically those stocks which do well in the middle of an economic slowdown. That's why we're seeing strong rallies in the likes of Clorox Co. (CLX) , Cramer explained.
Let's lift up the top of that dependable Speed Queen and check out the charts and indicators of CLX.
In this daily bar chart of CLX, below, we can see how prices have trended higher from late April. Notice the heavy volume in late April to early August - buyers came in early and with both feet.
The daily On-Balance-Volume (OBV) line has been rising with the price action and its strength helps to confirm the recent upside breakout.
CLX is above the rising 50-day moving average line and the rising 200-day line. In early August we can see a bullish golden cross as the 50-day line crosses above the 200-day line.
The Moving Average Convergence Divergence (MACD) oscillator moved back above the zero line in October giving us a fresh outright go long signal. The MACD oscillator first gave us a buy signal in early June.
In this weekly bar chart of CLX, below, we can see that prices have broken out above their late 2017 price highs as well as the September highs this year. Prices have behaved strongly in the face of a broad market selloff in October and November. CLX is above the rising 40-week moving average line.
The weekly OBV line has just made a new high for the long move up telling us that buyers of CLX have been more aggressive and this helps to confirm the price gains.
The MACD oscillator on this longer time frame is also very bullish.
In this Point and Figure chart of CLX, below, we can see the breakout at $155.50 and a bullish price projection of $205.57.
Bottom line strategy: CLX has been strong the past seven months and I see no technical reasons why that strength will not continue. The $200-$205 area is my next upside price target while a close below $155 is my suggested risk point. Separate your lights and darks and go long.