Last week, 3M (NYSE: MMM) reported earnings, which were a huge disappointment for investors. Adjusted EPS were roughly 11% lower ($2.23 vs $2.50 last year) and sales were down about 5% YoY. The stock had plummeted from the highs of last week, near 219.70, to the area around the 190-dollar price tag. From the technical side, we can see that selling was so severe that it created a huge downside gap, which, probably, won’t get filled any time soon. For now, we believe the stock could try to find some grounds for a potential retracement back up, but the near-term outlook has now changed to a negative one. Any possible move higher could be seen as a correction before another leg of selling.
A further push lower could force the stock to test the 187.40 support barrier, which held the price from falling on January 17th. We may see MMM rebounding from there and potentially moving to the upside again. But if the stock struggles to overcome the 192.35 hurdle, or even the 194.30 zone, which is the low of November 30th, this could be seen as a sign of weakness and could send the price back down again. If this time the 187.40 obstacle fails to withhold the pressure, the share price could slide even further. This is when the 182.75 level could come into play once again and act as a strong support area, like it did on January 3rd.
Our oscillators, the RSI and the MACD, look quite oversold. But it doesn’t mean that they wouldn’t be able to stay in that territory for a while more. The RSI is currently below the 20 mark and the MACD is, not only way below zero and its trigger line, but continues to point lower.
Alternatively, in order to raise more interest among investors, in our view, the stock would need to get back above the 197.80 barrier, which previously acted as strong support on February 8th and March 8th. This way, we could start considering a possible move back to the 202.25 obstacle, a break of which may open the door to the 206.15 level, marked by the low of March 29th.
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
There are risks involved with trading of cash equities. Past performance is not indicative of future results. You should consider whether you can tolerate such losses before trading. Please read the full Risk Disclosure.
Copyright 2019 JFD Group Ltd.