For his final "Executive Decision" segment of Mad Money Thursday, Jim Cramer checked in Doug Peterson, president and CEO of S&P Global (SPGI) , the ratings agency.
Peterson said in this environment, companies are looking for liquidity at unprecedented levels and that means they're relying on the ratings and research that S&P provides. He said all of their services have been in high demand.
When the Federal Reserve announced their credit program, companies needed to prove that their bonds were investment grade. That proof came from S&P.
Peterson said S&P has a strong balance sheet and liquidity, but they turned to their own team of experts to re-evaluate their risks to ensure they continue operating at the level investors have come to expect.
Let's check out the charts of SPGI.
In this daily bar chart of SPGI, below, we see that prices slumped sharply from the middle of February to the middle of March. I am getting used to seeing this kind of move but the rally from the middle of March is not the norm. Prices are back up in the area of the February highs but unfortunately our favorite indicators are not with the program.
Trading volume has been on the decline since the middle of March and is back down to around what I would call the average turnover. The daily On-Balance-Volume (OBV) line has been disappointing in it has made only a slight recovery from its March low. The Moving Average Convergence Divergence (MACD) oscillator has rolled over and weakened to a take profits sell signal.
In this weekly bar chart of SPGI, below, we see a mixed picture. Prices are above the rising 40-week moving average line.
Prices are close to making a new weekly high close but the OBV line is below its best level and so far diverging from the price action. The MACD oscillator has crossed to the upside above the zero line for a new buy signal.
In this Point and Figure chart of SPGI, below, we see two key points. The chart shows a potential upside price target of $387. But we also see that a trade of $282.49 could weaken this chart.
Bottom line strategy: The $64,000 question is whether SPGI makes a double top formation or breaks out on the upside for a rally to the $387 area. Trading volume will likely be the clue. Stand aside until we see if volume increases on the rally or increases on a selloff.
