3M is another DOW component and a low beta stock. Beta is a measure of volatility (>1 indicates high volatility, <1 indicates low volatility). 3M comes in at 0.83, which means less violent price swings than the average stock. Although it seems a bit overvalued at a 15.88 P/E ratio (Price to Earnings), MMM has produced solid quarterly earnings and has healthy cash flow. Fundamentally, 3M is a sound company.

 Today’s Technical Analysis:

Looking at the chart, letter “A” indicates a trading range this stock has been in for the past two weeks. Stocks that trade in a tight range after a move up or down are said to be in consolidation. A consolidation could mean a “pause” resulting in a continuation of the move up, OR a “stage 3 distribution,” meaning it could be a prelude to a selloff. Based on the trading range, I’d be a buyer above 88, and a seller if it breaks below 85.

The letter “B” is the stock’s 200 day moving average. Notice the current stock price is significantly above the 200 day moving average. That is bullish mid to longer term, meaning there could be a pullback in the near term, but most likely you should buy on the pullback as there is a high likelihood the stock will resume its advance.

“C” is a 19/39 moving average crossover. Simply put, when the 19 (blue line) crosses up through the 39 (red line) it is a buy signal. When the 19 crosses down through the 39 it is a sell signal. So the “buy” signal is intact.

“D” is the 3 day RSI (Relative Strength Index). RSI measures the strength of the stock based on its recent price history. This chart shows that the RSI is rising and not overbought yet (above 70), so the stock could still move a bit higher.

Finally, “E” is the Slow Stochastic indicator. Slow stochastics are a momentum indicator. >50 is considered bullish, while <50 is bearish. >80 is considered overbought, while <20 is considered oversold. The indicator current shows the stock still has positive momentum, which is in agreement with the other indicators.

Bottom Line: “Hold,” but you could also buy now and place a stop loss order below 85, meaning if the stock breaks down below that level, your shares will automatically be sold, limiting your loss.