Rockwell Collins Shares Poised for Decline

 | Jun 13, 2016 | 4:09 PM EDT
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Rockwell Collins (COL) has been rolling over for the past 18 months. Things may have weakened enough in the past two months to prompt a more sustained decline in the weeks ahead. Protect long positions if you have them.

In this daily chart of COL, above, we can see that COL has made no upside progress in the past 12 months. Prices have crisscrossed the 50-day and 200-day moving averages several times, but prices remain stuck largely between $80 and $95. After an April test of the $95 level, prices have worked lower, breaking below the declining 50-day average and testing the 200-day average.

The On-Balance-Volume (OBV) line has a very slight upward slant to it, and is not a robust vote of confidence in the price action. The trend following Moving Average Convergence Divergence (MACD) oscillator is below the zero line and does not support the bull case at this point.

Looking at this weekly chart of COL, above, I am not sure if I can call it a triple-top formation, but there has been three big rally attempts in COL since early 2015. The 40-week moving average line is flat and being tested from above. The weekly OBV line peaked in the first quarter of 2015 and tells us that sellers have been more aggressive on COL for months. The MACD line on this timeframe looks like it is going to generate a new sell signal as it is poised to break below the zero line again. A close below the 200-day average soon and the 40-week average on Friday should prompt a decline to $85 and may be back to $80 again. Keep your powder dry.

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