3M Company (MMM) beat earnings per share estimates, on 28 July, but the stock gapped below its 50-day and 200-day simple moving averages (SMAs). 3M stock is then stabilized around its quarterly pivot at $152.54. Officially known as the Minnesota Mining and Manufacturing Company, 3M is a multinational conglomerate operating in the industrial sector, the safety of workers, the health and consumer goods sectors.
The stock closed Tuesday, Aug. 4, to $151.21, down 14.3% year to date and correct territory to 17.2% below its Jan. 14 high of $182.54. 3M is also in the bull market territory 32.6% above its March 23, but the stock is in the consolidation of a bear market decline of 37.5% from its Jan. 14 high of $182.54 March 23 low of $114.04. Its weekly chart is negative.
The stock is at a reasonable price, with a P/E ratio of 17.76 and a generous dividend yield of 3.91%. As a component of the Dow Jones Industrial average, this profile is the stock of one of the Dogs of the Dow for the year 2020.
The daily chart of 3M Company
Refinitiv XENITH
The daily chart for 3M showed a declining 200-day SMA in green. There were two crossovers – 50-day SMA rose above the 200-day SMA on Jan. 16 then down below, on the 6th of March, confirming the death of the cross. This signal-of-sale has led the stock to its March 23rd low of $114.04.
The V at the bottom of this low returned the stock to its 50-day SMA on April 7. 3M and peaked at $163.08, on 28 April, as a failed test of its 200-day SMA. The 200-day SMA has become a magnet since, with a minimum of $131.12 May 14 and a maximum of $169.54 on 8 June.
The quarterly pivot at $152.54 become a pole of attraction between the 9 July and August. 5, which is today. 3M stock is currently below its 50-day and 200-day SMAs at $157.25 and $158.35.
The weekly chart for the 3M Company
Refinitiv XENITH
The weekly chart of 3M is negative with the stock below its five-week modified moving average of $154.73. The stock is well below its 200-week SMA, or the return to the average, to $190.28. The 12 x 3 x 3 weekly slow stochastic reading should decrease from 63.50 this week, down from 67.10 31 July.
Trading strategy: Buy 3M shares of the Company on the weakness of its weekly and monthly value levels at $142.82 and $138.26. Reduce the holdings on the strength of its 20-day SMA at $158.35. The quarterly pivot remains of 152.54.
How to use my value levels and risky levels: The share price closing price on Dec. 31, 2019, has been an entry to my proprietary analytics. Half-yearly and annual, the levels are still on the charts. Each level uses the past nine closes in these time horizons.
The third quarter of 2020 the level has been determined based on the 30 June close, and the level in the month of August has been established according to the July 31 close. New weekly levels are calculated following the end of each week, while new quarterly levels occur at the end of each quarter. Half-yearly levels are updated at mid-year, the levels are set throughout the year.
My theory is that nine years of volatility between the farm are to assume all possible bullish or bearish event for the stock are taken into account. To capture the volatility of stock prices, investors should purchase shares of the weakness of a plan, the value and reduce the holdings of the strength to a risky level. A pivot is a level value of the risk level that was violated in its time horizon. Hubs act as magnets that have a high likelihood to be re-tested prior to their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings has been based on the backtesting of many methods of reading the stock prices of the momentum with the objective of finding the combination that resulted in the least number of false signals. I’ve been following the stock market crash of 1987, so I was happy with the results of more than 30 years.
The stochastic reading covers the duration of 12 weeks, high, low, and close for the stock. There is a row of calculation of the difference between the highest and the lowest compared to the farm. These levels are modified for a fast reading and slow reading, and I found that the slow playback will work best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered as overbought and readings below 20.00 regarded as oversold. A reading above 90.00 is considered to be a “swell parabolic bubble” of the training, which is usually followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered to be “too cheap to ignore,” which is usually followed by a gain of 10% to 20% over the next three to five months.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: investopedia.com
