Last Friday Jim Cramer talked about the housing market, which was receiving a big lift from Jay Powell and lower interest rates. He mentioned what goes into a house: lumber, copper, glass and paint to start. Cabinets, sinks, appliances and wiring, too. Construction means good things for Stanley Black & Decker (SWK) , which keeps beating numbers and raising numbers. Let's check out the charts of SWK.
In this daily bar chart of SWK, below, we can see that prices suffered a steep decline of $100 from February into late March. SWK has rebounded in the past three months or so with a few corrections along the way. Both moving averages are rising.
Trading volume has remained active since late February and the On-Balance-Volume (OBV) line has moved higher from late March to make a new high for the move up; this is bullish for prices as it tells us that buyers of SWK have been more aggressive these past few months, and we believe that volume precedes price and that prices soon could make a new 2020 high. The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in May for an outright buy signal. The indicator corrected into July and is now turning upward for a new buy signal.
In this weekly bar chart of SWK, below, we went back five years to get a better perspective on the price action. The February-March decline broke the 2019 lows, which is normally pretty bearish. However, prices quickly recovered. A breakout over the highs of the past couple years could be the path of least resistance now. Prices are back above the rising 40-week moving average line. The weekly OBV line did not break its respective lows and has since started a new up move. The MACD oscillator is quickly approaching the underside of the zero line and hopefully a buy signal on this longer time frame.
In this daily Point and Figure chart of SWK, below, we can see the price movement without any price gaps. The nearby price target is likely to be reached here on Monday for an upside breakout.
In this weekly Point and Figure chart of SWK, bellow, we can see a more impressive upside price target of $267. It which implies a breakout from the large consolidation pattern on the weekly bar chart in the $110 to $175 area, which projects to a target of at least $240 (the height of the pattern is $65 and when added to a breakout at $175 gives us a target of $240).
Bottom line strategy: Aggressive traders could go long SWK at current levels and they can add on strength. Risk a close below $138 for now. Targets start at $175 and range up to $240 and $267 longer term.
