In his first Executive Decision segment during Tuesday's busy "Mad Money" program, host Jim Cramer spoke with Rich Kramer, chairman, president and CEO of Goodyear Tire & Rubber (GT) . The tiremaker just posted a nice earnings beat on a 15% uptick in revenue.
Kramer said electric vehicles require new tire solutions that can handle the extra weight and torque. He said Goodyear is also looking forward to meeting the needs of shared mobility systems such as robo-taxis, where speeds are slower but reliability is essential.
When asked about the supply of rubber, Kramer noted that he's never had a problem getting the raw materials he needs.
Let's check on the supply and demand of the charts of Goodyear. Prices are a lot stronger than they were at the time of our Feb. 8, 2019, review.
In this daily bar chart of GT, below, we can see that prices have been rallying the past 12 months. The slope of the 50-day moving average is positive and tests of the line have been successful buying opportunities since November. The slope of the slower-to-react 200-day moving average line is also positive. The On-Balance-Volume (OBV) line has been bullish since late September and is close to making a new high for the move up as buyers of GT have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has been pointed down since early March but the two moving averages that make up this indicator are very close together, so we could soon see a buy signal.
In this weekly Japanese candlestick chart of GT, below, we can see a long lower shadow in March as traders rejected the lows. This suggests we will see further upside movement. The slope of the 40-week moving average line is positive. The weekly OBV line shows a rise from June and the MACD oscillator is still bullish.
In this daily Point and Figure chart of GT, below, we can see that prices reached an upside price target in the $18 area. We also see that potential chart resistance is from 2019 and not particularly heavy so it is very possible that the rally can continue without a lot of resistance.
In this second Point and Figure chart of GT, below, we manipulated the data a bit. Here we used weekly close-only price data with a five-box reversal filter. A lot of price history is shown and a potential longer-term price target in the $56 area. Impressive.
Bottom line strategy: Tires are not as interesting as chips or cloud-based platforms or a cure for a disease, but the charts of GT are bullish and I would buy GT at current levels, risking a close below $16. Our price targets are $24 and then $56.
