For his last Executive Decision segment of Wednesday's "Mad Money" program, Jim Cramer checked in with Blake Moret, chairman and CEO of Rockwell Automation (ROK) , a producer of industrial automation technology that just posted 26% organic growth.
Moret said Rockwell's mission is to empower highly trained and engaged workforces with state-of-the-art factory automation technologies and systems. Rockwell's recent acquisition of Plex Systems will extend its capabilities with all new cloud-native software solutions.
Moret said e-commerce companies and warehouses need conveyors, sorting machines and communication systems to run efficiently. And while Amazon (AMZN) is a big Rockwell customer, Moret said many other retailers are upgrading their operations.
Let's check out the charts of ROK. In our last review back on Feb. 5 we wrote, "Defer purchases of ROK for now. Wait for a new base pattern to develop."
In this updated daily bar chart of ROK, below, we can see that ROK made an upper-level base pattern from March to the end of May and then a fresh rally started. Prices are back above the rising 50-day moving average line and above the bullish but slower-to-react 200-day average line. The On-Balance-Volume (OBV) line has been very strong from early June and tells us that buyers of ROK have been very aggressive. The Moving Average Convergence Divergence (MACD) oscillator is well above the zero line, but the two moving averages that make up the indicator are right on top of each other. A buy or sell signal could come quickly.
In this weekly Japanese candlestick chart of ROK, below, we see a constructive picture. Prices are in a longer-term uptrend and trade above the rising 40-week moving average line. The weekly OBV line has an upward bias and the MACD oscillator is bullish. The current candle is not over for the week but it could be a long-legged doji and the possible start of a top reversal. We need to keep an eye on this.
In this daily Point and Figure chart of ROK, below, we can see a potential upside price target of $346.
In this weekly Point and Figure chart of ROK, below, we can see the software is projecting a potential longer-term price target in the $390 area.
Bottom line strategy: Traders who are long ROK should hold with a $279 stop. Add to longs or initiate longs above $303. The $346 area is our first price target.