Johnson Controls Looks Vulnerable to Further Declines

 | Feb 17, 2017 | 8:06 AM EST
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Johnson Controls International (JCI) has rolled over in recent months and is testing its 200-day moving average line. It looks vulnerable to further declines. Let's examine the current state of the indicators and see what action we should take.

In this daily bar chart of JCI, above, we can see that prices made a peak in late November/early December. Prices made a recovery rally in January, but JCI failed to make a new high to maintain the uptrend. So far this month, prices have slipped lower and have both made a new low for the move down and they are testing the rising 200-day moving average line.

With the slope of the 50-day moving average line pointed down, a break of the 200-day average line has more gravity. The On-Balance-Volume (OBV) line rose with prices from early 2016 until November, but it has moved sideways since. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in bearish territory below the zero line.

In this limited weekly chart of JCI, above, we can see that prices are testing the rising 40-week moving average line. The OBV line on a weekly timeframe broke below its prior low signaling increased selling. The MACD oscillator has given a liquidate longs sell signal, but is still above the zero line.

Bottom line: the chart of JCI has weakened and a close below $40.50 is likely to prompt further selling as would a close below $39, the September/October lows.

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