Now Is Not the Time to Become Bearish on Honeywell

 | May 17, 2017 | 2:30 PM EDT
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Stock quotes in this article:

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Honeywell International (HON) is trading lower Wednesday not showing any immunity to the 200+ point decline in the narrow Dow Jones Industrial Average. HON was not eroding ahead of today's "sea of red" so I do not anticipate a serious decline or pullback. The stock has some minor support in the $130-$129 area and more support in the $127-$122 area.

Let's look at our usual array of charts and indicators to show you what I mean.

In this daily bar chart of HON going back 12 months, below, we can see a strong uptrend from early October. Prices are above the rising 50-day moving average line and the rising 200-day moving average line. The daily On-Balance-Volume (OBV) has been rising since early November and is still pointed up. There must be some selling today but there doesn't seem to be aggressive selling ahead today. The Moving Average Convergence Divergence (MACD) oscillator is crossing to a take profits sell signal but not an outright sell.

In this three-year weekly bar chart of HON, below, we don't have any bearish indicators. Prices are above the rising 40-week moving average line. The weekly OBV line has been rising steadily for the past three years and the weekly MACD oscillator remains in a bullish mode.

In this Point and Figure chart of HON, below, we can see and important breakout at $118 with a longer-term upside price target of $195.

Bottom line: Could the price of HON decline? Sure, but with the short-term and longer-term trend up, no weakness in the OBV line, and support nearby at $129 and then $127-$122, I would not look to become bearish.

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