During the fast-paced Lightning Round of Jim Cramer's Mad Money program Wednesday night, one caller asked about Owens-Illinois (OI) ."I'm not encouraged. I'd take a pass," was Cramer's candid response.
Let's check out the charts of this global glass container maker.
In this daily bar chart of OI, below, we can see a long sideways trading range for OI with key support around $16. The support held until early this month when prices gapped sharply lower on heavy turnover.
The weakness was developing earlier with the bearish slopes of the 50-day and 200-day moving averages and the decline in the On-Balance-Volume (OBV) line from as far back as March. A declining OBV line only happens when there is heavier volume traded in a stock on a day it closes lower. This signals that sellers are more aggressive and want to get out of longs.
The Moving Average Convergence Divergence (MACD) oscillator moved below the zero line in early May giving technically oriented traders plenty of warning.
In this weekly bar chart of OI, below, we went back five years to get some perspective. The downtrend in OI is not new. Prices show a high in 2017 and so does the OBV line.
The 40-week moving average line has had a negative slope for more than two years and the weekly MACD oscillator has been below the zero line most of the time since early 2018.
In this weekly close only Point and Figure chart of OI, below, we can see a potential downside price target of $5 being projected. Prices got cut in half since March and they could be cut in half again.
Bottom line strategy: With all three of our charts of OI bearish, investors and traders have a strong message to avoid purchases.