PPG Industries (PPG) was pointed out by Jim Cramer last night during his Mad Money program on CNBC. He noted that "Shares of PPG were able to soar 4.7% Thursday, despite the company forecasting slowing growth earlier in the quarter. "
The word "despite" is a word that technical analysts pay attention to as it is a signal that the market is forward looking - a key point of logic behind the discipline called technical analysis. Let's check out the charts and indicators this morning.
In this daily bar chart of PPG, below, we can see that the price of PPG made a "double bottom" of sorts in October and December with lows around $94. Prices not just rallied Thursday but they have been firming since late December crossing the 50-day moving average line and now the 200-day average line. A close above the early December peak will be a significant bullish event should it happen.
The On-Balance-Volume (OBV) line tells a bullish story as it has been rising the past 12 months even while prices have declined. The upturn in the OBV line actually looks stronger since the October price low. A rising OBV line is a signal that buyers of a stock have been more aggressive with heavier volume being traded on days when the stock has closed higher.
Lastly, the Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts signal at the end of December and is now very close to crossing the zero line for an outright go long signal.
In this weekly bar chart of PPG, below, we can see a number of positive/bullish clues. Prices are set to close the week above the declining 40-week moving average line.
The weekly OBV line shows a rise from May of last year and it is close to making a new high for the move up.
The weekly MACD oscillator is crossing upwards from below the zero line for a longer-term cover shorts signal.
In this Point and Figure chart of PPG, below, we can see an upside price target of $118 being projected. A rally to $118 will be bullish and could open the way to further gains with the breakout above the $115.37 high.
Bottom line strategy: The technical signals and clues for PPG all point up and traders and investors should approach PPG from the long side here and on strength. Risk below $102.
