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We looked at Vulcan Materials (VMC) - Get Reportat the end of February and felt it was vulnerable to further declines. Now as we look ahead to April and the rest of the year, we continue to be worried about further declines.
In this updated daily bar chart of VMC, above, we can see that since the end of February VMC made a rally to the underside of the declining 50-day moving average line, but that the rally failed. Prices are below the flat 200-day moving average line. Prices have made new lows for the move down from the late-January peak. On Tuesday VMC made a new low for the move down and probed the top end of support in the $110-$106 area from September/October.
The pattern of volume and the On-Balance-Volume (OBV) line are not constructive. Volume has been heavier in February and March compared to December and January. The OBV line peaked in November and declined through February. The OBV line has been steady in March, which might be a positive. The 12-day momentum study in the lower panel shows higher lows from February and March while prices made lower lows. This difference is called a bullish divergence and can foreshadow a bounce or reversal as the pace of the decline has slowed.
In this weekly chart of VMC, above, we can see that prices are now below the flat 40-week moving average line. The weekly OBV line has been weak the past two months and the MACD oscillator is in a liquidate-longs mode with a bearish crossover above the zero line.
In this Point and Figure chart of VMC, above, we can see that VMC has a little bit of support left in the $108 to $106 area. Prices could hold and rebase and then move to the upside again. A rally to $116 would be a start. If VMC declined to $104, it could open the way to further losses.
Bottom line: VMC is still pointed down and support below the market does not look all that significant. The bulls will need to prove themselves with VMC.
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