3M Co. (MMM) - Get Report is slated to report earnings before the opening bell on Tuesday, Jan. 29. The stock is below a "death cross" on its daily chart, but is poised for a positive weekly chart on favorable forward guidance. This set-up favors a core long position going into the earnings report.
The international conglomerate is a component of the Dow Jones Industrial Average and faces global headwinds that include the trade war and tariffs, the slowing economies around the world and currency woes.
3M closed Wednesday at $192.29, up just 0.9% so far in 2019, and is in bear market territory 26% below its all-time intraday high of $259.77 set on Jan. 26, 2018. The stock set its 2018 low of $176.87 on Dec. 26 and is 8.7% above this level. The stock lags the Dow 30, which closed Wednesday at 24,575.62 up 5.4% year to date and 8.8% below its all-time intraday high of 26,951.81 on Oct. 3. The average is up 13.2% since trading as low as 21,712.53 on Dec. 26.
Analysts expect 3M to earn $2.27 per share when they report their fourth-quarter earnings before the opening bell on Jan. 29. The company is a multi-national technology conglomerate that manufactures industrial, safety and consumer products including the ever-popular "post-it notes." The company has a slightly elevated P/E ratio and a decent dividend yield of 2.83%, according to Macrotrends. A wildcard will be guidance as to whether the 34-day-and-counting partial-government shutdown is hurting product sales, which includes industrial coatings and ceramics. Don't overlook the increasing costs of retirement benefits, raw materials inflation and interest expenses.
Daily Chart for 3M
Courtesy of MetaStock Xenith
The daily chart for 3M shows that a "death cross" was confirmed on April 30 when the 50-day simple moving average fell below the 200-day simple moving average, indicating that lower prices lie ahead. This negative was in play when the stock set its 2018 low of $176.8 on Dec. 26. The stock tested its 200-day simple moving average several times on strength with opportunities to reduce holdings at $217.38 on Sept. 21, at $216.34 on Oct. 3, at $209.05 on Nov. 16 and at $207.82 on Dec. 3. The 2018 close of $190.54 was input to my proprietary analytics and resulted in four risky levels that are shown as horizontal lines on the chart. My monthly, semiannual, annual and quarterly risky levels are $207.20, $209.01, $230.32 and $233.17, respectively.
Weekly Chart for 3M
Courtesy of MetaStock Xenith
The weekly chart for 3M will end positive if the stock ends above its five-week modified moving average of $194.09. The stock is just above its 200-week simple moving average or "reversion to the mean" at $186.83. The 12x3x3 weekly slow stochastic reading is projected to rise to 42.14 this week up from 39.57 on Jan. 18.
Given these charts and analysis, buy weakness to the 200-week simple moving average of $186.83 and reduce holdings on strength to my monthly, semiannual, annual and quarterly risky levels at $207.20, $209.01, $230.32 and $233.17, respectively.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.