MMM has periods where it trends really well. But this year there have been two deep pullbacks which would've stopped most trend traders out of their buy positions.
Since price broke above the September pivot high the candles have not been overly convincing. There was a gap up on 31st October but it was a doji, followed by a gravestone doji, which did not inspire confidence. However, the next bar broke out on higher volume so this could've been the first opportunity to get into this trade.
Yesterday another bullish flag was confirmed (on higher volume) offering traders the opportunity to now consider entering long on MMM (or add to their trade).
Hi Anne, thanks for sharing your analysis. Agree this has some more upside. The last gap you noted, does this appear to be a continuation gap or possibly exhaustion gap. My chart data seems to to have disappeared for some reason prior to 1988. But the longer term appears to be as reaching the significant top. Though in this throw ever we could reach 180 and that number could be big from Gann perspective. Just curiouse about your longer term expectation. Here is my chart to illustrate what I am saying.
iAnneTrader
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Hi Dan,
Thank you for your further analysis. It's great to have another perspective!
I don't think the gap was exhaustion. The doji wasn't bullish - which I would've preferred to see - but volume was marginally higher. And since then the trend has continues its upward move.
I see you have MACD on your chart. There is no indication here that price is looking to reverse just yet. I try not to use predictive tools as in my experience they are wrong as often as they are right - so I just trade the trends until I get stopped out.
Out of interest, what tool have you used to determine that a top has been reached?
Thanks
Anne
DanV
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Hi Anne
I agree with you regarding the predictive tools if you mean Fibs extension of projection, particularly if used by themselves. However, they do have relationships to adjacent or alternate swings, just not always obvious.
Unfortunately you will note that on my chart using TV data, the price history prior to 1988 which was there but is now missing was possible larger wave 1 using EW theory. If that is correct then we are in final section of wave 5 which is topping zone for the entire cycle.
Secondly based on EW there is normally momentum divergence between wave 3 top and wave 5 top. This could be seen on RSI. Similar minor divergence on bot the RSI and MACD Histogram is evident between Dec 2013 high and current high. These could fail of the price continues higher, but should be potential warning signals to ensure either start taking risk of the table or to have protective stop in place to reduce risk or loss of profit.
Move up since 2009 low appears to be form of rising wedge, also often evident in final swing of the cycle wave 5 in this case.
If it is exhaustive gap, it does not mean it will reverse immediately, but should be on the alter as this gap has taken place after a substantial move up already even since Jan 2014. So just a warning to keep in mind.
So, putting it all together this observation are in the 5th wave substantial developed and at confluence of several fib relations and accompanied by potential failing momentum should be warning. In addition similar observation are notable for the wider market too. So it want be specifically do do with the company but market in general that could cause the top to form.
As it is monthly chart there has to be some room of margin of error. but my conclusion is that the upside could be limited. Having said that it could spike into 180 as it is one of the significant Gann number just ahead of the current price.
Here is the snapshot again with divergences or possible exhaustion of the on momentum shown.
iAnneTrader
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Thank you for taking the time out to explain your analysis to me. There aren't many long-term traders on TV so it's interesting to see a decades long EW!
I know your data doesn't go back far enough (I admit I don't even attempt to go back more than 20-25 years) but hasn't the high of EW1 breached the low of EW4?
DanV
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Yes, it has. minor breaches are acceptable as on many leverage financial instruments and futures market momentary breaches do occur. The missing data was there sometime ago when I originally prepared the chart. I don't day trade at the moment and are unlikely to. I spend a lot of time doing chart analysis and correlation and intermarket analysis so then day trading or even swing trading for few days do not seem to offer corresponding reward. But for now till I have reasonable capital, the focus is on using long term far out of the money options for big moves. So most of my analysis is not larger time frame. So watching for that illusive market top. lol
iAnneTrader
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Will do! I'm going to have a good look at the market indices now - well, maybe not right now but at some stage tomorrow ;)
I tried day/swing trading years ago but just seemed to lose too much on the spreads - and its a lot of hard work for little reward as you're constantly looking for new opportunities.
Now I look for what most people call long-term trades but what you would probably call medium-term - weeks to months. This sits well with my account size and my personality.
Now let's see if I can work out how to "follow" ...