For his second "Executive Decision" segment on Tuesday's Mad Money program, Jim Cramer spoke with Blake Moret, chairman and CEO of Rockwell Automation (ROK) . The industrial firm reported earnings that missed expectations and the stock plunged sharply Tuesday.
Moret said Rockwell could have done better in the quarter, but supplies of semiconductors used in many of his company's products remain in short supply. But shortages are steadily improving, Moret explained, thanks to supplies increasing production and Rockwell itself, reengineering some of its products to change or streamline the number of chips they use.
Automation at the company remains a high priority for factories and manufacturing around the globe. Rockwell continues to be a leader in many industries, including EVs and batteries, life sciences and the aforementioned semiconductor equipment market.
Moret said the energy sector has also increased in importance, as Rockwell's systems are used in the production of liquefied natural gas.
Let's check out the charts and indicators as TheStreet's Quant Ratings service has downgraded ROK shares.
In our November 11 review we wrote that "Traders still long ROK should raise stops to $310. Traders who are flat could go long ROK at current levels risking to $310. The $411 area is our next price objective."
In the daily bar chart of ROK, below, we can see that the shares stalled out in November and December and then started to weaken in January. Traders who went long ROK would have been stopped by the end of the month. ROK continued to weaken and gapped lower on Tuesday with a weak close. Prices are trading below the declining 50-day simple moving average line and below the declining 200-day moving average line.
The trading volume has been increasing this year and surged sharply higher Tuesday. The On-Balance-Volume (OBV) line is in a downward trend as traders are more aggressive sellers with heavier trading volume being traded on days when ROK has closed lower. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In the weekly Japanese candlestick chart of ROK, below, we see a bearish picture. Prices broke a longer-term uptrend and now are in a downtrend and trade below the declining 40-week moving average line.
The weekly OBV line shows a decline from December to confirm the price weakness. The MACD oscillator turned lower in December/January and is now in a bearish alignment below the zero line.
In this daily Point and Figure chart of ROK, below, we can see Tuesday's sharp decline and a lower price target of $141.
In this weekly Point and Figure chart of ROK, below, we see the same $141 price target.
Bottom-line strategy: The new low for the move down on ROK Tuesday keeps the downtrend in force. Avoid the long side for now as the odds favor further declines in the weeks ahead.
