Deere Could See a Period of Consolidation Ahead

The conditions I saw last month are still intact.

Jim Cramer had positive things to say on Mad Money Monday night about Deere & Co. (DE) . When we looked at the charts of DE on Sept. 23, we wrote that, "Weakness in the broader market averages could drag DE lower in the days and weeks ahead. Longs should nail down profits." Well, DE and the broader market decided to ignore my forecast over the past three weeks, but that has not significantly altered the charts.

Let's check the charts out again. 

In the updated daily bar chart of DE, below, we can see a mostly bullish picture. The shares have tacked on another $20 since our take profits recommendation. DE is still above the rising moving average lines.

The On-Balance-Volume (OBV) line is still pointed up but the 12-day price momentum study shows lower highs from September to October. This slowing momentum reading is a bearish divergence when compared to the higher price highs over the same time period. This is not a huge multi-month divergence but it is a heads up that the rally is slowing. 

 

In the weekly bar chart of DE, below, we can see that the share prices have doubled from their March low and this might draw out some profit-taking. The 40-week moving average line remains bullish.

 

The OBV line has made a new high but the 12-week price momentum is slowing. 

 

 

 

In this daily Point and Figure chart of DE, below, we can see a potential upside price target of $241. 

 

In this weekly Point and Figure chart of DE, below, we can see a possible upside price target in the $269 area but we can also see that prices are extended and probably in need of a period of consolidation. 

 

 

 

Bottom-line strategy: DE has continued higher after our call to take profits. I hate leaving money on the table but the conditions I saw last month are still intact despite the further rise. Stay defensive.

 

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