Parker-Hannifin Is Pounding Out Singles

 | Jan 19, 2018 | 8:31 AM EST
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Our last review of Parker-Hannifin Corp. (PH) was in early December and we wrote:"In this Point and Figure chart of PH we can see the uptrend and a possible longer-term price target of $217.38. A decline to $176.97 will likely weaken this chart and a trade up to $191.64 will be a fresh breakout. Bottom line: I cannot really put my finger on something particularly bearish about PH, other than volume shrinking on the most recent leg up, but I would recommend that longs raise their sell stop protection to a close below $180." PH has continued to rally and our recommended stop below $180 never entered the picture. Now that PH is closer to that $217 price target should our strategy change? Let's visit with the charts and indicators again.

In this daily bar chart of PH, below, we can see that prices are still above both the rising 50-day moving average line and the rising 200-day line. The daily On-Balance-Volume (OBV) line has been trending upwards from late August and has continued to make new highs to confirm the price advance. The Moving Average Convergence Divergence (MACD) oscillator is good at identifying trends and is still pointed upwards. If the two moving averages of this oscillator cross to the downside it will signal a take profits sell and not an outright sell.

In this weekly bar chart of PH, below, all the indicators are in a bullish position. Prices are above the rising 40-week moving average line -- this simple tool would have kept you in the advance since early 2016. The weekly OBV line continues to rise, telling us that buyers of PH are more aggressive with heavier volume seen on the weeks that the stock has closed higher. The trend-following MACD oscillator is bullish.

In this Point and Figure chart of PH, below, we can see our $217 price target again.

Bottom line: Similar to our last review of PH I cannot find reasons to be bearish but I would still recommend raising sell stop protection from below $180 to a close below $195. We really do not know what tomorrow will bring but having an exit strategy is always a good idea in my book.

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