CMI Watch

Cummins Inc. (CMI) -- they make diesal and natural gas engines -- has moved bull phase on the fast stochastic with an upward gap today that has the stock trading 2.8% above Friday's close. Goldman has upgraded the stock to "conviction buy", which sounds like it has something to do with going to prison, but must have a happier meaning, given the price joy showing on the chart.

	trend	sto	sto zone	pps	psar	macd	macd trend	ma20	ma200
CMI $84.33

On the charts, this is a stock to jump aboard. The price hit an all-time high of $84.93 today, and the price is well above the 20-day and 200-day moving averages.

The fast stochastic signal comes as a reversal of a bear phase opened on Sept. 7, a signal that barely made a dent in the price.

So far as the fundamentals go, its a mixed bag: price to sales, the current ratio, institutional ownership, 5-year revenue growth -- all are a bit low. Return on equity, a low-end but acceptable 21%.

The dividend is only 1.25%, nice but nothing to set off fireworks about.

Of course, what's really to like is the 267% (!!!) rise from the recession low in November to 2008 to today. The 200-day moving average has trended up since August 2009. This is a stock a long-term chartist could fall in love with.

On the person's chart, the price is midway between the first and second upper weekly pivots.

Person's Table

	pps	pps open	upper pivot	lower pivot
CMI $84.33		$77.07 sep1	$85.07 +0.9%	$80.34 -4.7%

Reversal Levels

• $84.93, +0.7% (all-time high)
• $84.33 <== You are here.
• $78.12, -7.4% (20-day ma)
• $71.51, -15.2% (swing low)
• $64.51, -23.5% (200-day ma)

Bottom line: I love this stock technically. Fundamentally, not so much. The stock appears in Jim Cramer's portfolio.

Disclaimer

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

Abbreviations:

• pps - Person's Proprietary Signal.
• psar - Parabolic Stop and Reverse
• ma20 - 20-day moving average
• ma200 - 200-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways.
• sto: green for bull, red for bear.
• sto zone: green for overbought (80+), red for oversold (20-), yellow for neutral zone
• psar, pps, macd: green for bull mode, red for bear.
• macd trend: green for rising, yellow for sideways, red for falling.
neutral.
• ma20, ma200: green for above the average by more than 1%, red for below the average by more than 1%, yellow for within 1% either side of the average.