Investor Mario Gabelli appeared on FinTV Wednesday morning and recommended Mueller Industries (MLI) . He was "talking his book" but I decided to check out the charts of this manufacturer of copper and copper alloy products and other goods.
In this daily bar chart of MLI, below, I see a decent looking chart picture. Prices have stayed in two large sideways consolidation patterns with a decent rally in between in July. MLI was trading above the 50-day moving average recently and above the rising 200-day line.
The trading volume looks like it has improved since July while the On-Balance-Volume (OBV) line shows a drift lower from early August. The Moving Average Convergence Divergence (MACD) oscillator has moved around the zero line the past year and is now crossing to a cover shorts buy signal.
In this weekly Japanese candlestick chart of MLI, below, I see a mostly bullish long-term setup. Prices have advanced the past three years largely staying above the rising 40-week moving average line.
The OBV line has diverged from the price action for over a year now with its sideways movement. The MACD oscillator has stayed above the zero line for much of the past three years but is in a downward move but narrowing. Strength above $70 is needed to restart the uptrend.
In this daily Point and Figure chart of MLI, below, I see that prices reached a downside price target in the $60 area.
In this weekly Point and Figure chart of MLI, below, I see a lower price target of $48. A trade at $71 is needed to refresh the uptrend.
Bottom line strategy: Typically when fundamentally oriented investors appear on FinTV they have a bullish story and rarely mention "what could go wrong" or what to risk on the way to potentially higher prices. And yes technical analysts who appear on TV also are guilty of certain sins.
The charts of MLI are okay but with the risk of weakness below $58. Let's see how it behaves over the next two months.
