For his second Executive Decision segment of "Mad Money" Monday, host Jim Cramer spoke with Jim Fish, president and CEO of Waste Management (WM) , which just posted a beat-and-raise quarter.
Fish said everyone expected Waste Management's revenues and volumes to be down, but fortunately, they were down less than many people expected. The other silver lining was that Waste Management discovered it can run its operations at lower costs than it expected.
When asked about the economy, Fish said Waste Management isn't beholden to any one sector. That means as retail and restaurant volumes declined along with stadiums and other venues, residential volumes picked up. Housing continues to be a positive for the company, a trend Fish said he expects to continue well into 2021. And he reminded viewers that Waste Management is America's largest recycler.
Let's check out a few charts before they get recycled. We looked at WM back on May 7 and wrote at that time, "WM needs to adjust to the new economy and so do the charts, which need a lot more base building. Avoid the long side for now."
In this updated daily bar chart of WM, below, we can see that prices have moved in fits and starts since late May. Prices are now trading below the declining 50-day moving average line but just above the bottoming 200-day moving average line, which was just tested. The On-Balance-Volume (OBV) line shows some modest weakness from late August, suggesting some amount of more aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator has recently slipped below the zero line for an outright sell signal.
In this weekly bar chart of WM, below, we see a picture that is just on the edge of turning lower. Prices are testing the slightly declining 40-week moving average line. The weekly OBV line showed a peak last month and the MACD oscillator is poised to cross to the downside for a take profits sell signal.
In this daily Point and Figure chart of WM, below, we can see a potential downside price target in the $96 area.
In this weekly close-only Point and Figure chart of WM, below, we can see a potential longer-term price target in the $142 area.
Bottom line strategy: WM has broken its uptrend from March. This could evolve into a sideways trading range for a while or we could see a decline to the $96 area if the Point and Figure chart has it right. I would recommend standing aside until the picture resolves itself.
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