For his first Executive Decision segment of "Mad Money" Wednesday, Jim Cramer spoke with Benno Dorer, chairman and CEO of Clorox Co. (CLX) , the consumer goods giant that posted an earnings beat on Tuesday that has sent the stock up 6.5% since a week ago.
Cramer first asked about the coronavirus, as bleach is one of the most effective ways to kill viruses. So far, Dorer said, there are no inventory shortages, but Clorox is building inventories just in case.
Turning to the quarter, Dorer said Clorox saw 3% sales growth with better gross margins and profits. It is well-positioned to excel in the second half of 2020, he said.
We looked at CLX earlier this week and on Jan. 28, but we caught the bottom back on Nov. 25. Let's check the charts again on this Action Alerts PLUS holding.
In this daily bar chart of CLX, below, we can see how prices have sprinted higher in December and January. Prices are trading above the rising 50- and 200-day moving average lines. The 50-day line is ready to cross above the 200-day line for a bullish golden cross. This math-driven buy signal is typically late but can be effective in long-trending markets. The trading volume has increased this year and that is another positive for CLX as more investors drive prices higher. The daily On-Balance-Volume (OBV) line has been strong since late November, telling us that buyers of the stock have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in early December for a buy signal.
In this weekly bar chart of CLX, below, we can see that the current advance is the third or fourth attempt to break out above the $165 area. Prices are above the now-rising 40-week moving average line. The weekly OBV line is close to making a new high for the move up and the MACD oscillator is crossing the zero line now for an outright go long signal.
In this daily Point and Figure chart of CLX, below, we can see that the trade at $165.07 was a new high for the move up -- a breakout to the upside. The chart also shows $194 as a potential upside price objective.
Bottom line strategy: With an earnings beat and strong charts I am looking for the upside breakout to continue. Stay with longs recommended in previous articles. Stops could be raised to $156 now. The targets are $194 and probably the round number of $200.
