3M Company (MMM) Chart – April 24, 2009

I charted the past three months of the daily prices for 3M (NYSE: MMM) after the close on Friday, April 24, 2009 when it finished the week at $57.00.  (A single fundamental note – MMM released earnings on Friday and cut its 2009 forecast, but says it sees a bottom.  Clearly the street liked their wording.)

• MMM traded on both sides of its 10 day simple moving average (sma) for four days this past week
• MMM started Friday on that same 10 day sma and didn’t look back as it lurched higher
• On those first four days where MMM crossed through its 10 day sma it found support on two trend lines that track the trends of higher lows
• That trend line also is in line with MMM’s 20 day sma
• MMM hit resistance at its trend line of higher highs

Opinion = MMM is due for a flattening out at a minimum to give the trend line of higher highs a chance to move up more.  MMM has approximately $5.00 worth of downside risk in it before it hits the trend lines of higher lows.  With MMM so high into its trading channel as of Friday’s close, the potential risk outweighs the potential reward, but might not for long.  If MMM makes it below $55 again in the near term the upside potential will be worth the potential risk.