3M Co. (MMM) is moving lower in premarket trading after the diversified technology giant here on Tuesday reported a third-quarter earnings beat but a revenue miss and lowered its full-year guidance. In our Aug. 28 review of 3M we wrote, "The charts and the indicators of MMM suggest we are going to see new lows. Avoid the long side of MMM as a decline into the $120-$100 area is likely." Prices declined to our price objective in recent weeks, so let's see where MMM may go from here.
In this daily bar chart of MMM, below, we can see that the share price of MMM has been in a decline the past 12 months. Trading volume was very heavy in late August and early September. This kind of volume could be considered "throw in the towel" selling, but prices continued to sink lower into October. The On-Balance-Volume (OBV) line has remained flat, which tells us that buyers are not turning aggressive at these lower levels. The Moving Average Convergence Divergence (MACD) oscillator has been improving in recent weeks but is still below the zero line.
In this weekly Japanese candlestick chart of MMM, below, we do not see a compelling bullish picture. Prices are still in a longer-term downward trend as they remain below the bearish 40-week moving average line. The OBV line is struggling. The MACD oscillator has narrowed but has not crossed to the upside for a cover shorts buy signal.
In this daily Point and Figure chart of MMM, below, we can see a potential downside price target in the $81 area.
In this weekly Point and Figure chart of MMM, below, we have the same price target of $81.
Bottom line strategy: Shares of MMM may or may not decline to the Point and Figure target of $81, but the stock does need to form a base pattern. Prices could hold around $110 or so and form this anticipated base pattern. I am taking a wait-and-see approach.
