Medtronic ( MDT) reported fiscal fourth-quarter results early Thursday that missed slightly on earnings per share and revenue, though the medical device maker did raise its quarterly dividend 8%. Medtronic shares were down mildly in pre-market trading on the announcement.
In our review of Medtronic last Oct. 13 we wrote, "It looks like MDT will be on the defensive for a bit so traders should stand aside and let things shake out and then rebase."
Let's check out the charts and indicators of Medtronic again.
In this daily bar chart of MDT, below, we can see that prices tested the $100 level several times since December. Prices have traded around the 50-day moving average line and is still below the declining 200-day moving average line, but it now intersects around $114. The On-Balance-Volume (OBV) line made a low in March and shows a steady pattern now. Aggressive selling appears to be over. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside for a cover shorts buy signal but is still below the zero line.
In this weekly Japanese candlestick chart of MDT, below, we can see some lower shadows around $100 as traders rejected those lows. The weekly OBV line has declined from last April but is starting to show some improvement recently. The weekly MACD oscillator has turned up but is still below the zero line.
In this daily Point and Figure chart of MDT, below, we can see a downside price target of $88 but a trade at $106.54 or higher should improve the picture.
In this weekly Point and Figure chart of MDT, below, we can see a downside price target in the $86 area. We'll see.
Bottom line strategy: Shares of MDT were lower in pre-market trading, but I like the bottoming action since December. Aggressive traders could begin to probe the long side of MDT on weakness. Others should wait for strength above $106.54. Risk two consecutive closes below $100. First target the $114 area. A close above $115 is bullish.
