3M Company Signal 08/12: What Will Follow Breakdown? (Chart)

(MENAFN- Daily Forex) Short Trade Idea

Enter your short position between $167.48 (Friday's close) and $174.69 (the upper band of its horizontal resistance zone).Market Index Analysis

• 3M Company (MMM) is a member of the Dow Jones Industrial Average, the S&P 100, and the S&P 500.
• All three indices rallied close to all-time highs on low volumes and amid rising bearish pressure.
• The Bull Bear Power Indicator for the S&P 500 is bearish but shows a negative divergence and does not support the recent rally.

Market Sentiment Analysis

Equity futures are pointing modestly higher, building on last week's optimism that the Federal Reserve will deliver a 25-basis point interest rate cut this week. The October JOLTS report, delayed by the now-resolved government shutdown, will provide a much-anticipated snapshot of the faltering labor market. Markets will receive reports from Oracle and Adobe on Wednesday, and Broadcom and Costco on Thursday, which could inject volatility. Investors also monitor potential antitrust issues following Netflix's announcement of plans to acquire Warner Bros. assets for $72 billion. On the macroeconomic level, China's November trade data showed its surplus exceeded expectations.3M Company Fundamental Analysis

3M Company is an industrial conglomerate that supplies over 60,000 products to industrial clients, the transportation sector, the electronics industry, the worker safety market, and the consumer goods market. It has over 100,000 patents.

So, why am I bearish on MMM following its breakdown?

I am bearish amid the struggles to find organic growth, while ongoing costs and litigation tied to PFAS pressure its balance sheet. Still, valuations remain high despite negative earnings growth, rising input costs, and lackluster revenue growth. Operating margins are contracting, the debt-to-asset ratio is worsening, and the outlook is dim amid a slowing economy.

3M Company Fundamental Analysis Snapshot

The price-to-earnings (P/E) ratio of 26.75 makes MMM an expensive stock in its industry, but it is fairly valued relative to the S&P 500. By comparison, the P/E ratio for the S&P 500 is 29.21.

The average analyst price target for MMM is $174.25. This suggests negligible upside potential, with increasing downside risks.3M Company Technical Analysis

Today's MMM Signal

3M Price Chart

• The MMM D1 chart shows price action breaking down below its horizontal resistance zone.
• It also shows price action between its ascending 0.0% and 38.2% Fibonacci Retracement Fan levels.
• The Bull Bear Power Indicator turned bearish with a descending trendline.
• The average bearish trading volumes have risen during the breakdown.
• MMM moved lower as the S&P 500 advanced, a bearish trading signal.

My Call on 3M

I am taking a short position in MMM between $167.48 and $174.69. I remain bearish, as I see costs rising while revenue growth is decreasing, and valuations remain high.

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• MMM Entry Level: Between $167.48 and $174.69
• MMM Take Profit: Between $144.25 and $148.46
• MMM Stop Loss: Between $178.18 and $183.53
• Risk/Reward Ratio: 2.17

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