During Monday's Lightning Round segment of Mad Money one caller quizzed Jim Cramer about Louisiana-Pacific Corp. (LPX) . "I want to stick with Louisiana Pacific," was Cramer's response.
Let's check out the charts and indicators of this lumber and building materials company.
In the daily bar chart of LPX, below, we can see that the shares made a strong rally into early May. Prices have been correcting lower in recent weeks and have declined below the now declining 50-day moving average line. Some chart support is visible in the $55-$50 area and the rising 200-day moving average line intersects around $45.
The On-Balance-Volume (OBV) line shows a bullish rise into April and then a slow erosion lower into June. The Moving Average Convergence Divergence (MACD) oscillator has moved below the zero line for an outright sell signal. We now need to watch for a narrowing of the two moving averages.
In the weekly Japanese candlestick chart of LPX, below, we see that the shares have rallied from a large base in the $25-$20 area. Prices have pulled back/corrected lower but now we see a potential harami bottom reversal pattern. Prices are well above the rising 40-week moving average line.
The weekly OBV line shows a rise and only a May/June decline. The longer-term pattern of the OBV line is bullish. The MACD oscillator has only crossed to the downside for a take profits sell signal.
In this daily Point and Figure chart of LPX, below, we can see a potential downside price target in the $54 area. A rally to $59.23 will strengthen this chart.
In this weekly close-only Point and Figure chart, below, we used traditional even dollar scaling and a five-box reversal filter. Here the software shows us a potential price target in the $304 area.
Bottom-line strategy: Traders who are comfortable with buying into weakness could go long LPX at current levels and toward $54. Risk below $45 (the 200-day line) for now. Our long-term price target is the $300 area.
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