Are there any safe havens in a volatile environment? There are if you know where to look, Jim Cramer told viewers of his "Mad Money" program Wednesday. Dividend stocks traditionally have been the place to go, but the trick is to know which dividends are safe and which are at risk of being cut.
Cramer recommended Prologis Inc. (PLD) , a warehouse REIT that benefits from the boom in e-commerce. Prologis recently appeared on "Mad Money" and boosted its dividend by 9%. On March 31 we looked at the charts of PLD and wrote at that time, "While I am finding a growing list of stocks that look like they can rally in the second half of this year, others such as PLD look like they will struggle. Avoid PLD for now." Unfortunately I was correct that PLD would weaken, but the pullback stopped at $70 and then reversed upward to a new high.
Let's check out the charts again here on Thursday.
In this updated daily bar chart of PLD, below, we can see that prices rallied strongly from their March low right up into a band of resistance in the $90-$100 area. Prices moved up above both the 50-day moving average line and the 200-day moving average line but are in the process of pulling back or correcting some of the recent strength. Trading volume has diminished so far this month, showing a lack of commitment by new longs. The daily On-Balance-Volume (OBV) line shows improvement from the middle of March but is still below its best levels. The Moving Average Convergence Divergence (MACD) oscillator is crossing the zero line for a buy signal but it has begun to narrow, which suggests the trend strength is weakening.
In this weekly bar chart of PLD, below, we see a mixed picture. Prices retraced the bulk of the decline suffered from February to March, but now short-term traders are probably cashing in on the rapid recovery. PLD moved above the 40-week moving average line but now they are probably going to dip back below that indicator. The weekly OBV line shows only stability and not a strong move up, which suggests that buyers are not that aggressive on this longer time frame. The MACD oscillator is below the zero line but narrowing toward a cover shorts buy signal.
In this first Point and Figure chart of PLD, below, we used daily price data. Here the X's and O's point to a pullback to the $82 area.
In this second Point and Figure chart of PLD, below, we used weekly price data. Here the software is projecting a potential price target in the $125 area.
Bottom line strategy: If PLD pulls back to $82 and stabilizes it should be a good location to go long or add to longs. Risk a close below $75.