Industrial giant 3M ( MMM) plunged sharply lower since the middle of August and now is just pennies away from making a new 52-week low. Let's check out the charts and indicators of this member of the Dow Jones industrial average and the S&P 500 and other key indexes.
In this daily bar chart of MMM, below, we can see that prices dropped swiftly below the 50-day moving average line following a trading peak below the declining 200-day moving average line. The trading volume has soared dramatically higher as traders have voted quickly with their feet. The daily On-Balance-Volume (OBV) line is showing some quick moves up and down, but has not, so far, made a new low for the move down. The Moving Average Convergence Divergence (MACD) oscillator is pointed down toward the zero- line.
In this weekly Japanese candlestick chart of MMM, below, it is hard to miss the two large red (bearish) candles in recent weeks. The price action below $130 does not look strong enough, in my opinion, to prevent new lows in the weeks ahead. The slope of the 40-week moving average line is negative and the rally in July/August stopped short of it. The weekly OBV line is leading the way down and has already made a new low and is foreshadowing new price lows in the weeks ahead. The MACD oscillator is below the zero- line and narrowing -- not a good sign.
In this daily Point and Figure chart of MMM, below, we can see that a trade at $123.69 will be a new low for the move down on this chart and it will refresh the downtrend. A downside price target of $102 is being projected.
In this weekly Point and Figure chart of MMM, below, we can see an upside price target of $199 but a new low for the move down should turn this chart bearish.
Bottom line strategy: The charts and the indicators of MMM suggest we are going to see new lows. Avoid the long side of MMM as a decline into the $120-$100 area is likely.
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We got a broad rally on Friday after a week of narrow action -- but once the debt ceiling news hits, the market will go on to the next stage of action.
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