Shares of medical device maker Medtronic plc ( MDT) were cut to a "sell" rating by UBS Wednesday. Let's review the condition of the charts and indicators.
In this daily bar chart of MDT, below, I see a mixed picture. Prices declined from April to December. Prices bounced into early February where they failed at the underside of the declining 200-day moving average line. MDT has made, for now, a slightly higher low in March. The 50-day moving average line is cresting and prices trade below it. Trading volume was heavy in November and December and suggest we may have seen a change of ownership from weak hands to stronger hands.
The On-Balance-Volume (OBV) line rose from October to February before weakening in March. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and trying to generate a cover shorts buy signal.
In this weekly Japanese candlestick chart of MDT, below, I see a mixed picture. Prices are in a longer downward trend from 2021. Prices have not made a new low recently to refresh the downtrend and that is a minor positive. The slope of the 40-week line is bearish.
The weekly OBV line has been moving sideways since July. The trend-following MACD oscillator has improved in 2023 after a sideways move last year.
In this daily Point and Figure chart of MDT, below, I can see a potential downside price target in the $67 area.
In this weekly Point and Figure chart of MDT, below, I see the same $67 price target as the daily chart above. A trade at $74 should refresh the downtrend.
Bottom line strategy: Downgrades to sell by fundamental analysts typically come "late in the game", so if we see MDT decline to a new low for the move down we should not become too bearish. This is part of the basing process.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
The technical signals of the iconic food company seem lukewarm at best.
Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation.
If you have questions, please contact us here.