For the Executive Decision segment of "Mad Money" Thursday, Jim Cramer sat down with Jim Fish, president and CEO of Waste Management Inc. (WM) , a stock that's up 30% in 2019, to find out what's really going on with our economy.
Fish said despite what the bond market may be signaling, business at Waste Management is humming along. He said Waste Management serves just about every segment of the economy and is continuing to see positive revenue growth. Fish added that construction remains strong as does small business, and even the company's special waste collection operations are not seeing any signs of slowing. In addition, the company is very active in disaster recovery, and Fish said there seems to be more fires, floods and hurricanes these days as compared to years past.
When asked about the labor market, Fish said Waste Management is still able to hire everyone it wants to hire, but also is investing over $100 million in technology to develop things such as remotely operated landfill equipment that can reduce labor costs.
Cramer remained bullish on WM.
Let's check out the charts and indicators to round out the story.
In this daily bar chart of WM, below, we can see the strong rally from the twin lows of October and December. There were only a few small pauses as prices soared from below $85 to almost $120 in less than eight months. WM has been testing the rising 50-day moving average line this month but holding up way better than the broad market. WM is a bit extended versus the rising 200-day moving average line.
The daily On-Balance-Volume (OBV) line shows a bullish pattern or trend from October as buyers of WM have acted more aggressively. In the lower panel is the 12-day price momentum study that shows lower highs from June, telling us that the pace of the advance has been slowing. With prices continuing to make new highs this is a bearish divergence as the indicator does something different from price.
In this weekly bar chart of WM, below, we can see the nearly doubling of the stock in the past three years. The rising 40-week moving average line has been a great indicator if you traded in the direction of the slope. The weekly OBV line has been rising and confirming the price trend, but the OBV line looks like it is turning flat. The 12-week price momentum study shows that momentum or acceleration is slowing and this could foreshadow a consolidation phase or a correction.
In this Point and Figure chart of WM, below, we can see the long rise in price. A still higher price target in the mid-$140's is indicated, but a trade at $111.98 injects some potential weakness.
Bottom line strategy: It is amazing to find a stock performing so strongly when most stocks are getting crushed. The rally in WM has been slowing since June, so a period of sideways price action would be expected. To be prudent, recent longs should consider a sell stop below the early August low.