During the Lightning Round segment of "Mad Money," callers get to ask Jim Cramer about stocks in which they are interested. On Monday's show one called asked about CME Group Inc. (CME) "This is best in show. It is doing very very well," Cramer said.
I started out in the commodity business in the early 1970s when the exchanges were all private institutions and you hired your cousin to be your clerk. It is amazing to see how they have changed over the decades. Let's check out the chart of CME here on Tuesday.
In this daily bar chart of CME, below, we can see that prices started a rally in March that carried to early September. Prices have been correcting lower for nearly two months now, but it does not look worrisome to me. Yes, prices are below the declining 50-day moving average line, but trading volume has not increased on the decline and the daily On-Balance-Volume (OBV) has been extremely firm the past two months. Traders did not become aggressive sellers but instead held their long positions.The Moving Average Convergence Divergence (MACD) did slip below the zero line for a sell signal.
In this weekly bar chart of CME, below, we can see that prices have more than doubled in the past three years and the price weakness on the daily chart looks like a plain vanilla correction on this chart. Prices are above the rising 40-week moving average line. The weekly OBV line has been very strong since March and tells us that buyers on this time frame have been very aggressive. The weekly MACD oscillator crossed to a take profits sell signal.
In this Point and Figure chart of CME, below, we can see no distribution pattern; rather, we see only an upside price target of $273 projected.
Bottom line strategy: The charts and indicators of CME are pointed higher. Trade CME from the long side and add on strength.
