In his first Executive Decision segment of "Mad Money" Monday, Jim Cramer spoke with Doug Peterson, CEO of S&P Global (SPGI) , and Lance Uggla, chairman and CEO of IHS Markit (INFO) , which on Monday announced a planned merger of the financial information companies that values IHS Markit at $44 billion.
Peterson said the companies will combine two high-growth areas of the financial markets and the new entity will boast 76% recurring revenue. He noted there's almost zero overlap between the two companies and they don't expect any regulatory issues.
Uggla said by combining their information assets and content delivery networks the two companies can create whole new categories of information products using the latest in analytics and artificial intelligence. "Nothing else beats this combination," Uggla said.
We last looked at the charts of SPGI back on May 15 and wrote at that time, "The $64,000 question is whether SPGI makes a double top formation or breaks out on the upside for a rally to the $387 area. Trading volume will likely be the clue. Stand aside until we see if volume increases on the rally or increases on a selloff."
Let's check and see how things turned out.
In this daily bar chart of SPGI, below, we can see that the On-Balance-Volume (OBV) line moved up smartly from the middle of May to July, telling us that buyers of SPGI were very aggressive. Prices got close to our $387 price target as they almost printed $380 at the beginning of September. Prices weakened the past three months but may be poised again for fresh gains. SPGI just rallied above the declining 50-day moving average line and its decline in late October toward the rising 200-day moving average line looks like a buying opportunity.
The OBV line weakened into late November, but the latest company news could mean the start of a rising phase. The Moving Average Convergence Divergence (MACD) oscillator is very close to crossing above the zero line for a fresh outright buy signal.
In this weekly bar chart of SPGI, below, we can see a mostly constructive picture. Prices have been in a longer-term uptrend. SPGI is trading above the rising 40-week moving average line. The weekly OBV line shows a long-term rise and only a minor correction in October and November. The MACD oscillator is above the zero line and narrowing toward a potential fresh buy signal.
In this daily Point and Figure chart of SPGI, below, we can see a nearby price target of $388. A rally to $388 could precipitate further gains to the round number of $400 in the weeks ahead.
Bottom line strategy: SPGI has traded sideways since July but now looks poised to resume its long-term uptrend. Aggressive traders could go long at current levels, risking a close below $330 with $400 our price target for now.