MMM (3M) - IN POSSIBLE DOUBLE TOP FORMATION
Background: MMM 3M Company Industrial Goods | Diversified Machinery | USA
It is included in the Industrial - Diversified Machinery (also a component of Dow Ind), which has been relatively strong group and 3M has demonstrated this and still has some upside potential but could be close to completing the larger 5 wave cycle.
Others in the group with decent daily volume, not necessarily direct competitors are at various stage of their respective cycle. They are:
Honeywell (HON)
Cummins Inc (CM)
Danaher Corp (DHR)
Illinois Tool Wks Inc (ITW)
Lennox Intl Inc (LII)
Please see monthly charts of these for perspective and comparison. From the chart you will see that many are in rising wedge formation and are showing strong divergence with RSI and in some cases even with Relative strength Vs Dow Ind. Suggesting that they are all in final stage of completing their major cycle.
Summary of technicals:
1. It at the upper end of a long term rising trend channel from 1970's showing major 5 wave cycle of which the wave 5 appear to have commence from 2009 low and is possibly in final swing wave v from Jan 2016.
2. The upside could be $180 - $190 tagging the upper trend line of the channel in proximity of fib confluence as detailed on monthly chart.
3. the double top- might not be equal top, rather a slightly higher top but it could form RSI divergence on monthly, as well MACD on daily.
4. Earnings is scheduled for 26th April and might drive the price higher to form the top. The volatility should come down after the release and price action will likely show sign of reversal before entering the trade.
5. Insiders have been busy selling for almost a year ranging from $154 - $162.73.
Conclusion:
Once it tops it could decline to $130 as initial target and then in due course towards $100 area and lower end of the rising trend channel. As this will be at the completion of larger 5 wave cycle, we could see deeper and longer correction than ones seen along the way.
Action:
Consider Jan 2017 PUT with strike price $100. These are quoted on 19/04/2016 (before market opens) around $0.66 - $0.81, a spread of $0.15 which looks competitive.
A possible fill around $0.40 - $0.50 on pending order would be acceptable or better a market order after the earnings and upon reversal confirmation.
Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, please do your own analysis for your trade and risk management. You should follow this on Paper Trading Account till you feel confident to apply the skill to a live account.
DanV
danv-charting.com
Background: MMM 3M Company Industrial Goods | Diversified Machinery | USA
It is included in the Industrial - Diversified Machinery (also a component of Dow Ind), which has been relatively strong group and 3M has demonstrated this and still has some upside potential but could be close to completing the larger 5 wave cycle.
Others in the group with decent daily volume, not necessarily direct competitors are at various stage of their respective cycle. They are:
Honeywell (HON)
Cummins Inc (CM)
Danaher Corp (DHR)
Illinois Tool Wks Inc (ITW)
Lennox Intl Inc (LII)
Please see monthly charts of these for perspective and comparison. From the chart you will see that many are in rising wedge formation and are showing strong divergence with RSI and in some cases even with Relative strength Vs Dow Ind. Suggesting that they are all in final stage of completing their major cycle.
Summary of technicals:
1. It at the upper end of a long term rising trend channel from 1970's showing major 5 wave cycle of which the wave 5 appear to have commence from 2009 low and is possibly in final swing wave v from Jan 2016.
2. The upside could be $180 - $190 tagging the upper trend line of the channel in proximity of fib confluence as detailed on monthly chart.
3. the double top- might not be equal top, rather a slightly higher top but it could form RSI divergence on monthly, as well MACD on daily.
4. Earnings is scheduled for 26th April and might drive the price higher to form the top. The volatility should come down after the release and price action will likely show sign of reversal before entering the trade.
5. Insiders have been busy selling for almost a year ranging from $154 - $162.73.
Conclusion:
Once it tops it could decline to $130 as initial target and then in due course towards $100 area and lower end of the rising trend channel. As this will be at the completion of larger 5 wave cycle, we could see deeper and longer correction than ones seen along the way.
Action:
Consider Jan 2017 PUT with strike price $100. These are quoted on 19/04/2016 (before market opens) around $0.66 - $0.81, a spread of $0.15 which looks competitive.
A possible fill around $0.40 - $0.50 on pending order would be acceptable or better a market order after the earnings and upon reversal confirmation.
Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, please do your own analysis for your trade and risk management. You should follow this on Paper Trading Account till you feel confident to apply the skill to a live account.
DanV
danv-charting.com
