BY MARK SEBASTIAN
September 30, 2024
It has been a wild ride for MMM over the last few years
At one point the market cap of 3M had fallen below 50 billion dollars, despite revenues over 28 billion dollars…that is how bad traders and investors viewed the company’s growth prospects…
Things bottomed out at the end of 2023 when the lawsuit business involving 3M earplugs finally came to an end, but its not like the stock took off, it floundered. And it’s not like the company wasn’t producing earnings.
Over the last twelve months MMM produced almost 10 dollars a share worth of earnings and was consistently beating the estimate….it was the fear of the other shoe dropping and declining revenues that were scaring traders…
But in the last quarter something changed … .3M beat earnings handily, despite weak revenue, but operating margins widened and the outlook was different this time…they raised.
If they can keep going on this path the stock should run to 150 or 160 before I think it finally takes a breather.
Watch to see if those Option Finger Prints get unwound…that is the sign to get out of dodge…what are those…make sure to read Andrew’s section.
3M Company (Ticker: MMM) has had a very nice rally since its last earnings report on July 26th.
The stock is making new highs today (Thursday) just under $140 coming from $103 pre earnings:
It is now bumping up against the top of my pitchfork which will be resistance and the Relative Strength Index is in overbought territory but the MACD has just now turned bullish.
We are seeing mixed signals.
When I add a new pitchfork to extend the rally, this is what I get:
The median line of the new pitchfork lines up with the top of the original pitchfork which is where Thursday’s high traded and was honored.
So where do we go from here?
Above that resistance $MMM will trade up to $145.
If that resistance holds and the stock rolls over, $135.75 is in the cards.
Overall the chart is bullish until we see a change in trend candle.
MMM IVs are at year highs!
Mark remarked above about MMM and their troubles with lawsuits and basically the in’s and out’s of what corporations go through. MMM was over $200 at one point over the last 2 years and just spun out a business. The bid for volatility and options in general in there belies more action.
Earnings are out in a month but traders have bid up options even more than when the stock was $70 in the throws of gloom. MMM has earnings power and was an earning juggernaut for a long time.
MMM 1 year chart with 60 day IVs
There has been a large uptick in Option Fingerprint over the last year. Now traders are coming for more OTM options. In general I think the AI revolution will lift all boats making companies more efficient as they learn to use it. Big manufacturers like MMM will no doubt benefit as well.
This is a stock i own and like it to run higher so I would grab some longer term call spreads since they bring good value at higher IVs.
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