Barclays lowered their price target for 3M (MMM) from $170 to $155 Monday as they see demand headwinds for 3M's products. Let's check out the charts and indicators to see where MMM may be going from here.
In our December 14 review we wrote that "MMM has reached a Point and Figure price target and there is a bullish divergence between the price action and the momentum study. I like this 'set up' and would suggest to aggressive traders to go long MMM at current levels. Risk a close $169 or a new low close for the move down. Add to longs above $186." Unfortunately the price of MMM only steadied itself into January and then proceeded to sink to new lows.
In this daily bar chart of MMM, below, we can see that prices found some buying interest (support) near $140. MMM made a shallow bounce towards the underside of the declining 50-day moving average line. The slope of the slower-to-react 200-day moving average line is negative. The trading volume looks like it has been heavier than average the past five weeks or so.
This increase in turnover looks to be a positive development but the daily On-Balance-Volume (OBV) line shows a decline and a recovery. The daily Moving Average Convergence Divergence (MACD) oscillator has improved from late February but is still below the zero line and not an outright buy.
In this weekly Japanese candlestick chart of MMM, below, we see a bearish picture. Prices are in a downtrend and trade below the declining 40-week moving average line. I do not see any bottom reversal patterns.
The weekly OBV line has been weak since August. The MACD oscillator is bearish but showing some narrowing.
In this daily Point and Figure chart of MMM, below, we can see a potential upside price target of $173.
In this weekly Point and Figure chart of MMM, below, we can see the same $173 price target.
Bottom line strategy: I do not see a bearish setup for MMM right now, however the bull case needs further development. I would stand aside for now and let the bulls and bears battle it out a little longer.
