In his first Executive Decision segment of "Mad Money" Monday, Jim Cramer spoke with Ravi Saligram, president and CEO of Newell Brands (NWL) , which owns a family of household brands ranging from Sharpie to Rubbermaid.
Saligram said Newell has all the brands people have been seeking out during the pandemic. It has everything for the home, from Yankee Candles to Calphalon and Mr.Coffee in the kitchen and Coleman for outdoor adventures. Newell has been hit with cost inflation, especially in shipping, Saligram noted, but he expects much of that inflation to be transitory as the economy reopens and rebalances for changing consumer needs.
Let's check out the charts of NWL. In our Feb. 8 review we wrote, "You have to be impressed with the base pattern on the weekly chart. Buyers should be patient and look to buy a pullback to the $24 area, risking below $22."
In this updated daily bar chart of NWL, below, we can see that prices pulled back in late February and early March to briefly touch the $24 area. Very nimble traders may have been buyers. Prices subsequently rallied into early May before rolling over. NWL is now trading below the declining 50-day moving average line and it is testing the rising 200-day line. The On-Balance-Volume (OBV) line shows a peak back in early February and has bearishly diverged from the price action; prices have made new highs while the OBV line went sideways to lower. This is a weak pattern and suggests we will see lower prices ahead. The Moving Average Convergence Divergence (MACD) oscillator has made lower highs from February and is now in sell territory below the zero line.
In this weekly Japanese candlestick chart of NWL, below, we can see top reversal patterns in May - several spinning tops and a bearish engulfing pattern. Prices are testing the rising 40-week moving average line. The weekly OBV line has been going sideways since May and is a bearish divergence when compared to the price action. The MACD oscillator has crossed to the downside and is pointed down toward the zero line.
In this daily Point and Figure chart of NWL, below, we can see a potential downside price target in the $23-$22 area.
In this weekly Point and Figure chart of NWL, below, we can see two key points. First, prices have reached an upside price target of $28. Second, just like in our Feb. 8 review a large base pattern can be seen.
Bottom line strategy: The charts and indicators of NWL have shifted from bullish to moderately bearish. Maintain stop protection on any longs and defer new purchases for the time being. Wait for a new base pattern to develop.
