Medtronic PLC (MDT) — MDT stock has been on my radar for some time, but only recently began looking interesting in relative terms. When searching for buy and sell candidates, I often look at a stock’s relative strength/weakness when compared to its sector and/or the broader market.
On the first chart, I plotted MDT stock versus the Health Care SPDR (ETF) (XLV), which gives us a good idea of how the stock is behaving compared to its sector.
While MDT stock displayed relative strength from September through February, it has lagged over the past two months. But now the ratio chart has retraced back to a previous resistance area that may act as support.
Keeping the above chart in mind, let’s move on to the big picture with a weekly chart.
Shares were capped in the high $50s from 2000 until 2014, when a big breakout finally occurred. That breakout exhausted itself in February of last year. (Note that the former resistance area was tested on the one-day selling spike in August.)
Finally, on the daily chart below, we see MDT stock been stuck in a big consolidation phase for the past 14 months that increasingly looks ready to resolve to the upside.
Indeed, we’ve seen a renewed breakout attempt over the past three trading days. The medium-term moving averages are closely coiled together as a result of the large consolidation range, which should help support a breakout if and when it comes.
From a technical perspective, this is a spectacular setup worth keeping a close eye on. Look to buy MDT stock on a break above the $79 area, preferably on a weekly closing basis, for a run into the mid-$80s.
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As of this writing, Serge did not hold a position in any of the aforementioned securities.
