Here's what Jim Cramer had to say about Waste Management Inc. (WM) during the Mad Money Lightning Round Wednesday night, "I think that's a terrific buy right here." Let's check the charts and indicators before diving in.
In the daily bar chart of WM, below, we can see that prices have rallied "straight up" from late December with only minor dips or corrections. Prices are above the rising 50-day moving average line and the bullish 200-day line. With prices about $20 or 20% above the 200-day line it is not hard to say that prices are extended. The daily On-Balance-Volume (OBV) line has been rising the past twelve months signaling that buyers of WM have been more aggressive.
In the lower panel is the 12-day price momentum study, which shows a slowing of acceleration from June to July even while prices are making new highs. This is a bearish divergence -- prices doing one thing while the indicator is doing something else. This is not a significant period of time but sometimes you never know what will trigger a correction.
In the weekly bar chart of WM, below, we can see that prices are further away from the 40-week moving average line than at any other time in the past three years. The weekly OBV line is bullish but the MACD oscillator has begun to narrow.
In this Point and Figure chart of WM, below, we can see a strong rally the past three years and there is still an upside price target of around $143.
Bottom-line strategy: If you are a recent long I would suggest a sell stop below $114. If flat WM the $105 area should be a better location to go long.