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January 3 Chart of the Day - Cal-Maine Foods

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Cal-Maine Foods (CALM) states they're the largest producer and distributor of shell eggs in the United States.

The company is in the headlines this week for announcing a definitive agreement to acquire a broiler processing plant, hatchery and feed mill in Dexter, MO, from Tyson Foods, Inc.

Also, the company is scheduled to report earnings today after market close making them among the first batch of companies reporting earnings in the new year.

So we wanted to take a look at the company's stock chart from a price action technical analysis perspective.

On the monthly chart the first thing we noticed was over two decades of historical data.  This indicates to us that there's should be enough data from a statistical perspective to mark up the chart using our "go to" price action charting tools that are native to every charting platform out there which in turn should be able to allow us to formulate a trade and/or investment plan.

Other things that we noticed was plenty of price movement and cycles.  Cycles up and cycles down.  In fact, since the 2008 time frame price has been moving in what many would consider a "technically correct" fashion creating "price structure" over the long term.

This can be seen by an upper trend line, a lower trend line, and a bull Fibonacci retracement where the 50% level ($35 area) held multiple times over the course of four years.

Now this may not be something a "buy and hold" investor might like but movement like this can be a trader's delight!

Down on the weekly chart we can see more of the same with respect to price structure.

This chart seemingly likes to move in a level to level fashion using support/resistance levels like paddles in a game of pong...

Additionally, we can see a bear Fibonacci retracement around the $58 level recently held and rejected the bulls, at least for now. 

News events like acquisition announcements, earnings, etc can often be a catalyst for price movement and for technical levels to "fill" so perhaps that's what wer'e seeing in this case.  

But it can often be difficult to know which comes first, the chicken or the egg or in this case news vs technical analysis.

Technically speaking, new all time highs (ATH) above $66 as well as price dropping down to the $40 or below area are in play and price would still be considered to be moving in a technically correct fashion.

Once again, there's that key word "moving" again.

From here, traders and investors can develop their own personal plans.

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

We'd like to hear from you in the comments sections.

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