In his first Executive Decision segment of "Mad Money" Monday, host Jim Cramer spoke with Scott Wine, chairman and CEO of Polaris Inc. (PII) , the off-road vehicle maker that saw its shares fall sharply Monday as investors were quick to dump outdoor and recreation stocks on news of a promising Covid-19 vaccine.
Wine said demand is strong for the company's vehicles and Polaris continues to be constrained by supply. He said it's not practical to expect its suppliers to ramp up production by 50% in a matter of months.
Polaris is also seeing strong demand for the light tactical vehicles it is selling to the military. The company has debuted 11 products for the military over the past 12 years and those vehicles will continue to be in demand, Wine said. That's because Polaris builds those vehicles to the exact specs the military needs.
Let's check out the charts of Polaris again. We last looked at PII on Sept. 30 and wrote at that time, "There are enough bearish signals from the indicators on PII to keep us from going long. Trading volume has increased on the downside on the daily chart and the weekly chart and that is rarely the pattern of accumulation or buying. Avoid the long side of PII."
In this updated daily bar chart of PII, below, we can see that prices made a huge outside day and lower close on Monday. Prices failed to break the early October highs and dove in one day to retest the late October lows. PII is in position to test or break the September lows. Prices are below the declining 50-day moving average line and just a slightly above the flat 200-day moving average line. The On-Balance-Volume (OBV) line has been on defense since late July and still tells me that sellers of PII are more aggressive. The Moving Average Convergence Divergence (MACD) oscillator looks like it could fail at the underside of the zero line.
In this weekly bar chart of PII, below, we can see a chart and indicators that are poised to possibly weaken. Prices are trading just above the flat 40-week moving average line and look ready to test or break support around $90. The weekly OBV line and prices peaked in August and suggest that sellers are getting the upper hand. The MACD oscillator has been in a take profits sell mode and is just slightly above the zero line now.
In this daily Point and Figure chart of PII, below, we can see that the software shows an upside price target, but a trade at $88.19 or lower is going to be a new low for the recent move down and should weaken the chart enough to turn it bearish.
Bottom line strategy: The fundamentals of PII are one thing but the charts tell me another story; avoid the long side as long as sellers seem to be in control.
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