Eastman Chemical Co. (EMN) was rated a new "Outperform" by a sell-side firm Tuesday, but I find the chart development more interesting at this point in time. Let's check on the charts and indicators.
In this daily bar chart of EMN, below, we can see that prices tested and held the $100 area in September. Prices are again testing the $100 area this month and so far prices have held steady. EMN has recently rallied above the 50-day moving average line and is just a few dollars below the 200-day moving average line. The trading volume has been pretty active since December suggesting good interest from investors and traders.
The On-Balance-Volume (OBV) line shows a series of higher lows from October suggesting a long period of more aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator has turned upwards and is only slightly below the zero line.
In this weekly Japanese candlestick chart of EMN, below, we can see a number of lower shadows on the candles this month. Traders are rejecting the lows. The trading volume has been more active since December.
The weekly OBV line shows an uptrend from December 2020. The weekly MACD oscillator is below the zero line but narrowing towards a potential cover shorts buy signal.
In this daily Point and Figure chart of EMN, below, we can see a potential upside price target in the $125 area.
In this weekly Point and Figure chart of EMN, below, we can see a possible downside price target in the $85 area. A trade at $114 is needed to improve the picture.
Bottom line strategy: Aggressive traders could probe the long side of EMN on available weakness. Risk to $103. Take profits on a rally towards $125 but be nimble enough to lower your target if the broad market turns weak.
