During Wednesday's Mad Money program, Jim Cramer continued to recommend buying high-quality industrial stocks on any weakness. He liked Union Pacific (UNP) on the heels of the Canadian Pacific (CP) acquisition of Kansas City Southern (KSU) earlier this week.
Let's check out the charts of UNP.
In this daily bar chart of UNP, below, we can see that prices have been climbing for the past 12 months. Prices turned more sideways from the middle of November. Prices have been crisscrossing the 50-day moving average line but have remained above the rising 200-day line.
The On-Balance-Volume (OBV) line has been largely neutral or balanced since November. The Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line for much of the time since November telling me there is little in the way of "trend strength".
In this weekly bar chart of UNP, below, we see a mixed picture. Prices are in a longer-term uptrend above the rising 40-week moving average line. The weekly OBV line has been neutral since May or June. The MACD oscillator has been correcting lower since October but remains above the zero line in bullish territory.
In this daily Point and Figure chart of UNP, below, we can see a potential downside price target in the $194 area.
In this weekly Point and Figure chart of UNP, below, we see a potential price target in the $250 area.
Bottom line strategy: With our longer-term Point and Figure chart suggesting a $250 price target, we want to be a buyer of UNP on a shallow correction. The daily Point and Figure chart suggests a dip to the $194 is possible and would mean a test of the rising 200-day moving average line. Wait and see if the 200-day line holds before purchase.
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