Terex (TEX) - Get Report manufactures cranes and other heavy lifting machinery and the company could use some of its own equipment to help raise its share price after it declined over 65% from its 2015 high.
The good news is the stock price is consolidating, and the technical indications are turning positive on multiple time frames.
The stair-step decline that continued into early this year has been followed by an attempt to hold a sharp bounce off lows and consolidate above support in the $19.25 area and below resistance at the 38% Fibonacci retracement level of the two-year decline. Currently shares are positioned just above the intersecting 10-week (50-day) and 40-week (200-day) moving averages. Moving average convergence/divergence on this timeframe is making a bullish crossover on its center line, and the accumulation/distribution line is crossing above its signal average.
On the daily chart, the 38% retracement level can be seen as the starting point of a downside gap in May that took the stock price back below the 200-day moving average. It has been able to moderate around the average and last week moved above the 50-day average and return to former support-turned-resistance at the $22.50 level. The relative strength index crossed above its 21-period average at the June low and has tracked higher and is back above its center line. The aroon indicator, which is designed to identify early shifts in trend, has made a bullish crossover below its center line, suggesting that a reversal move is in progress.
On the money flow side, the money flow index, a volume-weighted relative strength measure, is above its signal average and center line, and Chaikin money flow has reversed course and is back in positive territory. The stock had a positive day on Monday in the context of a negative broader market, and a close in upper candle range above the $22.50 resistance is a long entry point, using a trailing percentage stop.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.