Conclusion, Investment Implications, Strategy
Emerson Electric Co. (EMR) appears to be resuming its August 2020 major uptrend amid quarterly relative performance versus the benchmark S&P 500 (SPX). A sustained rise above the $80.97 area would help confirm this and target an additional 17% rise to $100.00 per share. This is an Asbury Momentum trade idea.
Analysis and Rationale
Emerson Electric Co. (EMR) designs and manufactures technology and engineering products for industrial, commercial, and consumer markets worldwide. It operates through Automation Solutions and Commercial & Residential Solutions segments. The company was formerly known as The Emerson Electric Manufacturing Company and changed its name to Emerson Electric Co. in 2000. Emerson Electric Co. was founded in 1890 and is headquartered in St. Louis, Missouri.
The upper panel of Chart 1 below plots EMR daily since October 2020 along with its 200- and 50-day moving averages, widely-watched major and minor trend proxies. The lower panel displays a corresponding daily relative performance chart of EMR versus the benchmark S&P 500 (SPX, blue) along with its 63-day moving average (green, quarterly, our Strategic time period).
The colored highlights in the upper panel show that EMR appears to be resuming its August 2020 major uptrend, as defined by its 200-day MA, following back to back successful tests of the 50-day MA on Jan 4th and 27th. Meanwhile, EMR’s current trend of quarterly relative outperformance versus SPX as shown in the lower panel also appears to be resuming following consecutive tests of it on those same dates. A sustained rise above the 50-day MA, currently situated at $80.97, would help to confirm this and would target an additional 17% rise to $100.00 per share.
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $80.90 area, a long entry price of $85.15 would provide a 1:3.5 risk/reward ratio (risking $1.00 to make $3.50) with an initial risk of 5.0%.
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