Deere & Co (DE) was rated a new outperform (buy) by Daiwa here on Wednesday with a $440 price target. My last review of DE was Feb. 17. when I wrote, "When the charts are mixed it is best to let the price action drive your next move." The rally fizzled out and prices turned lower in March, so let 's review the charts of the farm equipment giant again.
In this updated daily bar chart of DE, below, I can see that prices have been testing the rising 200-day moving average line the past two weeks. Trading volume has not increased the past two weeks and I point this out as you often see trading volume increase on successful tests of the 200-day line. The daily On-Balance-Volume (OBV) line shows a decline since late December, telling me that sellers of DE have been more aggressive than buyers. Trading volume has been heavier on days when DE has closed lower, telling us that traders are voting with their feet. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line. Trend strength is weak.
In this weekly Japanese candlestick chart of DE, below, I see a potentially weak picture. Prices are testing the rising 40-week moving average line. The recent candles show us upper shadows as traders reject the highs. The OBV line has been neutral/flat since December. The MACD oscillator is above the zero line but pointed lower in a take profit sell signal.
In this daily Point and Figure chart of DE, below, I can see a potential downside price target in the $345 area.
In this first weekly Point and Figure chart of DE, below, the software yields a target in the $361 area.
In this second weekly Point and Figure chart of DE, below, I used a five-box reversal filter. Here the software suggests a lower target in the $308 area.
Bottom line strategy: I like to see a positive-looking chart and a bullish fundamental story, but unfortunately the charts of DE are just not lined up to favor the bulls in my opinion.
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