During Tuesday's fast-paced Lightning Round segment of "Mad Money" one caller asked host Jim Cramer about Clorox Co. (CLX)
"I'm betting with Clorox. I'd buy them right here," was Cramer's response.
Let's check out the charts and indicators of Clorox.
In this daily bar chart of CLX, below, we can see that prices have been in a downtrend the past 12 months. Prices have recovered a little ground in recent sessions. The slope of the 50-day moving average line is negative and the 200-day moving average line is also pointed lower. The On-Balance-Volume (OBV) line has been in a decline for the past 12 months but we see some stability in recent days. The 12-day price momentum study shows higher lows from February, telling us the pace of the decline has been slowing. This is a bullish divergence when compared to the price action and can sometimes foreshadow a recovery rally.
In this weekly Japanese candlestick chart of CLX, we can see some subtle improvement. A bullish engulfing pattern can be seen in early June and chart support should be encountered in the $170-$145 area. Finding buying interest in CLX above the support zone is bullish, in my opinion. The declining 40-week moving average line intersects around $195 and could act as resistance if prices bounce further. The OBV line has been in a decline since last August but we may be witnessing a turnaround in June. The 12-week price momentum study in the lower panel shows higher lows since October. This is a bullish divergence.
In this daily Point and Figure chart of CLX, below, we can see a potential downside price target in the $131 area. A trade at $189.74 should improve the picture.
Bottom line strategy: CLX has not made a base pattern but it looks like it has made a low for now. Aggressive traders with patience could go long CLX at current levels, risking two consecutive closes below $170.
