For his "Executive Decision" segment of Mad Money Friday night, Jim Cramer checked in with Benno Dorer, chairman and CEO of Clorox Co. (CLX) , the consumer products giant with shares that have fallen from $166 over the summer to $146 now. The stock currently yields 2.9%.
Dorer said that while the quarter was challenging, Clorox remains on track to meet its full-year forecasts. He said innovations will drive its growth and the company's diverse portfolio of brands remains one of its biggest strengths.
When asked about the weakness this quarter, Dorer explained it stemmed from charcoal and trash bags. He said price increases for Glad bags were not well-received and are being rolled back, while Clorox has a new plan for Kingsford charcoal in 2020.
Let's check out the charts to round out the story.
In the daily bar chart of CLX, below, we can see a broad sideways trading range for the stock. For the past 12 months prices have managed to hold the $144 level -- in December, January, May, October and this month too.
Trading volume has increased at these lows to show that buyers seem to be defending that level. The On-Balance-Volume (OBV) line has been in a decline from July telling us that sellers of CLX have been more aggressive. This month it looks like the OBV line is stabilizing.
The 12-day price momentum study in the lower panel shows higher lows from September to November while prices made lower lows. This is a bullish divergence and tells us that the pace of the decline slowed. Why did it slow? Because someone bought more heavily as prices got cheaper. This buying can sometimes foreshadow a turnaround to the upside.
In the weekly bar chart of CLX, below, we can see how the $145 area or zone has been acting as support. Prices are below the bottoming 40-week moving average line.
The weekly OBV line shows only a small decline in the past three months and the Moving Average Convergence Divergence (MACD) oscillator, while below the zero line, has begun to narrow toward a cover shorts buy signal.
In this first Point and Figure chart of CLX, below, the chart is displaying a $137 potential downside price target. A rally to $153.96 will improve the picture.
In this second Point and Figure chart of CLX, below, we used weekly close-only prices to construct the chart. Here the data is projecting a potential upside price target of $261.
Bottom-line strategy: If we look real close at the first bar chart above we believe we see a "close above the high of the low day" reversal. If we get follow-through buying Monday aggressive traders could go long CLX here and risk a close below $144. Add on strength above $150.