Looking to sell MMM
I’ve been getting into chartology some in the stock market to hopefully pick up trends and give me more intuitive buying points. Something I was looking at today was the chart of 3M Technologies:
You’ll notice the line in the middle, that is the 200 day moving average of the stock. From mid-March to November of 2007, MMM was trading above that 200 day moving average; since the beginning of 2008 though it has almost exclusively traded below that trend line.
From Investopedia.com:
An indicator frequently used in technical analysis showing the average value of a security’s price over a set period. Moving averages are generally used to measure momentum and define areas of possible support and resistance.
Moving averages are used to emphasize the direction of a trend and to smooth out price and volume fluctuations, or “noise”, that can confuse interpretation. Typically, upward momentum is confirmed when a short-term average (e.g.15-day) crosses above a longer-term average (e.g. 50-day). Downward momentum is confirmed when a short-term average crosses below a long-term average.
I circled where the two trendlines cross, the first signalling upward momentum and the second downward momentum. Ideally, you would buy on the first signal and sell on the second; unfortunately I purchased the MMM back in June, where the trendlines are running nearly parallel.
Of all the stocks in my portfolio, 3M has lost me the least over the past few months as the market has tanked. I don’t believe MMM has any momentum right now and no where to go but continue to go down. So even the financials are sound with a decent yield, I’ll be looking to sell MMM here on its next rally.
I like the long term prospects of it but I believe I can buy it back later at a discount when the market starts to come out of its recession. I think I can use the cash in my portfolio for better purchases during what will possibly be more of a downswing in the future.
