During Wednesday's Lightning Round on Jim Cramer's "Mad Money" program, Jim replied to one caller about Colgate-Palmolive Co. (CL) : "This is a buying opportunity. The stock is down, pull the trigger."
Let's check out the charts and indicators of CL and keep the gun safely pointed down range until then.
In this daily bar chart of CL, below, we can see a small double-bottom pattern in October-December and then a rally into late July. Prices quickly rallied and quickly reversed those gains and have closed below the cresting 50-day moving average line. The 200-day moving average line is rising and intersects down around $67.
The trading volume slowed from January to the middle of July and it has increased the past two weeks. The On-Balance-Volume (OBV) line shows a rise from the beginning of the year to June and then it has slowly weakened. The Moving Average Convergence Divergence (MACD) oscillator has been weakening from early May and is barely above the zero line.
In this weekly bar chart of CL, below, we can see a mixed picture. Prices are above the rising 40-week moving average line but strength above $76 has been a problem for the stock the past three years. The weekly OBV line shows weakness from April, which suggests that sellers have been more aggressive. The weekly MACD oscillator has crossed to the downside, giving us a take profits sell signal.
In this weekly Point and Figure chart of CL, below, we can see that prices have reached a target of $72.49 and have reacted lower. A weekly close at $70.85 or lower should generate a downside price target.
Bottom line strategy: I love the shooting sports, including those all-day 1,000-yard matches with my M-1 and sporting clays with my 20-gauge, but I am not ready to squeeze or pull the trigger on buying CL. I want to see if $70.85 holds.