For his second "Executive Decision" segment of Mad Money Thursday, Jim Cramer spoke with Blake Moret, chairman and CEO of Rockwell Automation (ROK) , a company at the heart of the next industrial revolution.
Moret said he's very optimistic for the future. The pandemic has forced people to focus on the basics like food, clean water, health, safety and security, he said, and those are all of the areas where Rockwell is leading the field.
For customers like Thermo Fisher Scientific (TMO) , Rockwell plays a part in battling Covid-19. Rockwell's products assist with formulation, packaging and network security systems. Long-term clients like Kraft Heinz (KHC) also benefit from Rockwell's automation and network systems, he said.
The big focus for Rockwell is annual recurring revenues through on-going relationships and services, Moret added. Services will play a big part in Rockwell's future.
Let's check and see what the future holds in the charts. We haven't checked them in over a year.
In this updated daily bar chart of ROK, below, we can see that prices have recently broken the lows of December after making new highs in January. Some trend-following traders take that as a sign of weakness and I would not argue against it. The trading volume doubled on the decline telling us that some traders voted with their feet.
The On-Balance-Volume (OBV) line made a new low for the move down and the lowest level in many months. The Moving Average Convergence Divergence (MACD) oscillator just slipped below the zero line for an outright sell signal.
The rising 200-day moving average line is not far below the market and could get tested/broken in the days ahead.
In this weekly bar chart of ROK, below, we can see the start of some weakness. Prices are still in an uptrend above the rising 40-week moving average line.
The weekly OBV line moved sideways since May but is now pointed down. The MACD oscillator has crossed to the downside for a take profit sell signal.
In this daily Point and Figure chart of ROK, below, we can see a potential downside price target in the $207 area.
Bottom line strategy: Defer purchases of ROK for now. Wait for a new base pattern to develop.