Despite 'Trade War,' Cummins is Showing Bottoming Price Action

In last night's Mad Money program Jim Cramer weighed in on Cummins Inc. (CMI) and whether the China/U.S. "trade war" was going to hurt the engine maker. I will leave that discussion to people closer to the company and the issues. I just want the simple life of looking at the charts and indicators.

In this daily bar chart of CMI, below, we can see that prices have recently rallied above the bottoming 50-day moving average line. The declining 200-day moving average line is above the market around $160 but we can leave that indicator for another day. One step at a time. The daily On-Balance-Volume (OBV) line has broken its downtrend from early February and the line shows more aggressive buying since early July. In the lower panel is the 12-day price momentum study with higher lows from May to early July while prices made lower lows. This difference between momentum and price action is a bullish divergence as it shows that the decline slowed. A slower decline suggests that investors have been scale-down buyers and that typically foreshadows a rally....133 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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