The share price of 3M Co. (MMM) is down sharply from its January 2018 zenith but a strange development with some of the indicators since May has me stumped about the future of this global brand.
If you asked me a few weeks ago about MMM I would say that prices were headed lower but now the On-Balance-Volume (OBV) line has moved up to new highs. This means that someone has been an aggressive buyer of MMM despite bearish moving averages telling me the trend is down.
Some analysts will look at more indicators when they have mixed signals. I am not sure that adds to clarity and I would rather wrestle with my go-to tools.
Let's take a look to see if we can pin things down.
In this daily bar chart of MMM, below, we can see the downtrend from January to October. Prices have rebounded into November but have stalled at the underside of the declining 200-day moving average line. Prices have also stalled at the underside of the resistance in September and early October.
The volume pattern is mixed but the On-Balance-Volume (OBV) line shows a rise with reactions from early May. Even though prices have not broken above the October highs the OBV line has broken out to a new high. The OBV line can lead and I ask whether this breakout on the OBV line is foreshadowing a price breakout for MMM? Is it aggressive buying by a hedge fund? or a share buy back? I have no idea but the rising OBV line stands out to technical analysts.
In the lower panel we can see the Moving Average Convergence Divergence (MACD) oscillator cross the zero line for an outright go long signal.
In this weekly bar chart of MMM, below, we can see that prices are touching the underside of the declining 40-week moving average line.
The weekly OBV line is pointed up and gives us the same story as the daily OBV line.
The weekly MACD oscillator is still below the zero line but it is turning up.
In this Point and Figure chart, below, we can see an upside price target being projected. The $209.50 to $215.94 area is resistance and needs to be overcome for this chart to be bullish.
Bottom line strategy: If you can explain why the OBV line is so strong on MMM please let me know. I feel like MMM could open up or down with a gap one of these mornings and that does not make me comfortable.