For his second "Executive Decision" segment of Mad Money Monday night, Jim Cramer spoke with Rich Kramer, chairman, president and CEO of Goodyear Tire & Rubber (GT) .
Kramer said things are looking better with sales up 42% over a year ago with the company's gross margins expanding.
Goodyear is also innovating with intelligence tires. Kramer said their new tire sensors can monitor pressure, temperature, wear and load to accurately predict performance characteristics.
As for the company's challenges, Kramer explained the company is seeing higher than expected retirements and increased absenteeism that has led to a shortage of qualified workers.
When asked about the auto shortage, Kramer felt the crisis was a blessing in disguise. He said they've been able to meet demand and rebuild inventories.
Let's kick the charts and tires.
In this daily bar chart of GT, below, we can see that prices started a strong rally in late August. Prices have surged above the May/June highs and trade above the rising 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line has been slowly improving from July and the Moving Average Convergence Divergence (MACD) oscillator is bullish.
In this weekly Japanese candlestick chart of GT, below, we can see the price action of the past three years. Prices are trading above the rising 40-week moving average line. The weekly OBV line is bullish and rising and confirms the price gains we have seen this year. The MACD oscillator is also bullish.
In this daily Point and Figure chart of GT, below, we can see that prices have reached an upside price target around $20.
In this first weekly Point and Figure chart of GT, below, we can see a $26 price target. Not all that far away.
In this second weekly Point and Figure chart of GT, below, we used a five box reversal filter and here the software suggests we could reach $62 longer-term. A trade at $35 will be a major breakout.
Bottom line strategy: Taders could wait for a pullback to the $22 area on GT. This would fill a small gap on the chart. Risk to $18 for now. On the upside $26 and then $62 are our price targets for now.
