Procter & Gamble (PG) saw JP Morgan here on Friday upgrade its rating on the consumer products giant's shares to overweight (buy) with a $155 price target. Let's check the charts and indicators to see if they are on the same page with the fundamental assessment of P&G.
In this daily bar chart of PG, below, I can see a potentially weak chart. Prices made a low in October and then a strong rally into January but now prices are trading below the declining 50-day moving average line and the bearish 200-day moving average line. There was a surge in trading volume in late December as prices were making a high and that can suggest aggressive selling into price strength. The daily On-Balance-Volume (OBV) line shows a top in December/January followed by weakness, which points to a pattern of more aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line but has signaled a cover shorts buy.
In this weekly Japanese candlestick chart of PG, below, I see a confusing (at least to me) picture. Prices are trading below the negatively sloped 40-week moving average line but I can see several lower shadows on the candles in February. Math says the trend is weak but the lower shadows tell me that traders are rejecting the lows. The weekly OBV line has been neutral recently and the MACD oscillator is bearish as it crosses below the zero line.
In this daily Point and Figure chart of PG, below, I can see a potential downside price target in the $129 area.
In this weekly Point and Figure chart of PG, below, I see the same downside price target of $129.
Bottom line strategy: A fundamental upgrade from a firm such as JP Morgan will get many investors to look at PG. This interest could translate into fresh buying, but the charts right now suggest that investors and traders should go slow on new buying.
