A Mad Money viewer called in during the Lightning Round Friday night to ask about Pitney Bowes Inc. (PBI) the postage meters and mailing equipment company. Without any hesitation Jim Cramer said that, "These guys have not proven themselves." Let's see if the charts and indicators match this dour view of the company.
In this daily bar chart of PBI, below, we can see how prices were cut in half from early February to October. The slopes of both the 50-day moving average line and the 200-day moving average line have been bearish for all or most of the past year. Recently PBI broke out above the 50-day line. The On-Balance-Volume (OBV) line has been weak from January and tells technical analysts that sellers of PBI have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has spent much of the year below the zero line but could soon cross the zero line for an outright go long signal.
In this weekly bar chart of PBI, below, we went back to the end of 2014. Prices have been weakening the entire time. The 40-week moving average line is declining and bearish. The weekly OBV line indicates selling and the MACD oscillator is just now signaling a cover shorts buy signal.
In this Point and Figure chart of PBI, below we can see part of the long decline and an upside price target around $11. Despite a bullish price target, I would be slow to probe the long side of PBI.
Bottom line strategy: With chart resistance in the $8-$10 area and no base pattern to point to, I would look for PBI to trade sideways before resuming an upside move. Without a base pattern the risk is that the downtrend eventually resumes.