On Tuesday's "Mad Money" program during the show's second Executive Decision segment, host Jim Cramer spoke with Scott Wine, chairman and CEO of Polaris Inc. (PII) .
Business has been strong due to the pandemic, which resulted in "unprecedented demand," Wine said. Dealer inventories are low and thanks to year-round offerings spanning boats, snowmobiles, off-road vehicles and motorcycles, customers keep coming to Polaris, Wine said.
There have been issues due the pandemic, too, Wine acknowledged. For instance, it created a bit of a liquidity situation at first and caused headaches in the supply chain. But overall, demand has been strong as consumers seek outdoor and distanced activities. While the growth rate is bound to slow, Wine said he's confident there will still be growth in a post-pandemic world.
One source of that growth could be electric vehicles. Polaris has agreed to a 10-year partnership with Zero Motorcycles to help develop and produce electric offerings.
We last looked at PII on June 11, when we wrote, "After staying at home since March 7 I could use a good dose of outside activity, but I doubt I will be purchasing an 'adult toy.' PII has surged into the top end of a resistance zone. Prices could break out on the upside for further gains, but right now I think a pullback of some degree is in order. Let's wait and see how that unfolds before making a decision."
Let's check out the charts of PII again.
In this updated daily bar chart of PII, below, we can see that prices did pull back after our June 11 review. Prices rallied temporarily to a new high in August but retreated yet again and broke the June lows this month. Prices are currently trading between the declining 50-day moving average line and the declining 200-day moving average line. The daily On-Balance-Volume (OBV) line has been moving lower from late July and tells chart watchers that sellers of PII have been more aggressive, with heavier trading volume on days when PII has closed lower. Heavier volume on a down day tells me that longs want out. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in sell territory below the zero line but a cover shorts buy signal might develop soon.
In this weekly bar chart of PII, below, we can see a less-than-robust picture. Prices are trading above the declining 40-week moving average line. The weekly OBV line peaked at the end of July and turned lower. The MACD oscillator has crossed to a take profits sell signal in this longer time frame.
In this daily Point and Figure chart of PII, below, we can see that the software is projecting a potential upside price target in the $110 area.
In this weekly Point and Figure chart of PII, below, we can see that prices reached a downside price target in the $92 area. This does not mean that prices cannot decline further.
Bottom line strategy: There are enough bearish signals from the indicators on PII to keep us from going long. Trading volume has increased on the downside on the daily chart and the weekly chart and that is rarely the pattern of accumulation or buying. Avoid the long side of PII.
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