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Break Out for Bleach

David Becker
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Clorox Co. (NYSE:CLX) , which is best known for its bleach, but it also makes Glad trash bags, KC Masterpiece barbecue sauce, Kingsford charcoal and Liquid Plumber. Most of the products in its portfolio have the No. 1 or No. 2 market share. Clorox has paid increasing dividends to shareholders each year since 1977. It last announced a hike in May, raising its quarterly dividend to 71 cents a share from 64 cents

The 52-week range for the stock price is $ 72.20 – $94.11. Earnings increased 3% quarter over quarter and the 3-year earnings growth rate is up 3%. Sales increased 2% quarter over quarter and the 3-year sales growth rate is up 4%. The company has a profit margin of 15.1% and a dividend yield of 3%.

Recent insider purchases of CLX are a positive sign for future price action. On December 2, 2013 and December 3, 2013 Grant J LaMontagne purchased approximately 72,000 shares for a total value of nearly 4.4 million dollars.

The technical picture for CLX is robust. Prices pushed above the top end of the recent range on Friday and continue to hold support. The rally was accompanied by strong volume which can be viewed by analyzing the accumulation / distribution line which shows price action as a result of volume. Short term support is seen near the 20-day moving average at 92.30, and medium term support is seen near the 40-day moving average near 89.50. Momentum is strong as the MACD (moving average convergence divergence) index generated a buy signal as the spread (the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal. The RSI is printing near 69, which is on the upper end of the neutral range but still below the overbought trigger level of 70.

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