Let's Plug into Emerson Electric's Charts

In our Oct. 12 review of Emerson Electric (EMR) we wrote that "The fundamental story of EMR may sound rosy but the charts suggest the pullback in EMR that started in early September has not run its course and further weakness is possible. Buyers should be patient and wait for better technical conditions."

Let's see how things have progressed in the past four weeks.

In this updated daily bar chart of EMR, below, we can see that prices have struggled since early September. There have been a number of tests of the rising 200-day moving average line in October and early November. Trading volume has been active and the On-Balance-Volume (OBV) line has been weak and not showing us signs of aggressive buying. The 12-day price momentum study in the lower panel shows a low in September and a higher low in October when prices made a lower low. This is a bullish divergence and can foreshadow a reversal to the upside.

In this weekly Japanese candlestick chart of EMR, below, we can see that EMR has survived a number of weekly tests of the rising 40-week moving average line. The weekly OBV line has been overall strong and has mirrored the price action. The MACD oscillator is narrowing and getting closer to a new outright buy signal.

In this daily Point and Figure chart of EMR, below, we can see a potential upside price target in the $118 area.

In this weekly Point and Figure chart of EMR, below, we used a five box reversal filter. Here the software suggests a $137 price target.

Bottom line strategy: Traders could go long EMR at current levels. Risk to $91. Add to longs above $100.37. The $118 area is our first price target.

We're holding a Veterans Day Sale for our Action Alerts PLUS investment club. Get in on the conversation and get the latest investment ideas and trading strategies. For 48 hours, we're offering 30% off with this special sale. Click here and save $150.

Employees of TheStreet are prohibited from trading individual securities.