3M ( MMM) reported earnings Tuesday morning and traders and investors reacted by bidding the share price higher. Indeed, 3M is a subject of discussion in Doug Kass's Daily Diary on Real Money Pro.
In my June 23 review of MMM I wrote that, "A stock that holds its own or rallies in the face of bearish news is telling you something. It tells you that the discounting mechanism of stocks is at work. MMM traders are looking ahead of todays' legal settlement. Traders looking to buy MMM should be patient and wait for more of a base pattern to develop."
Let's review the 3M charts again.
In the updated daily bar chart of MMM, below, I can see that share prices declined into early July giving us a "retest" of the early June low. In July we can see that MMM rallied above the 50-day moving average line and the slope of the line has recently turned positive. The 200-day moving average line is bottoming and intersects above where MMM is now trading.
The On-Balance-Volume (OBV) line shows a quiet rise since early June. The Moving Average Convergence Divergence (MACD) oscillator is now back above the zero line.
In the weekly Japanese candlestick chart of MMM, below, I can see some promising developments. The shares are still below the declining 40-week moving average line but that condition could change soon. The candle patterns look positive with a lower shadow at the end of May.
The weekly OBV line shows an uptick in July after a long decline. The MACD oscillator has been improving but still stands below the zero line.
In this daily Point and Figure chart of MMM, below, I can see a potential upside price target in the $132 area.
In this weekly Point and Figure chart of MMM, below, I can see a price target in the $133 area.
Bottom-line strategy: Traders could go long MMM at current levels and on available weakness. Risk to $95 for now. The $133 area is my price target for now.
