United Technologies (UTX) is a member of that exclusive club of thirty a.k.a. the Dow Jones Industrial Average (DJIA). UTX traded higher today evidently on reports that Bill Ackman's Pershing Square Capital was building a position in the conglomerate. If Ackman was a buyer in 2009 at $45 I would be impressed. Or around $75 in 2011 and 2012 or around $90 in late 2015 or early 2016 -- all the major lows since early 2009. With prices now in the $130's I am not impressed. Easy for me to say. Let's look at some charts and indicators to see if this is a good idea.
In this daily Japanese candlestick chart of UTX, below, we can see that prices encountered resistance around $138 before correcting down to the 200-day moving average line around $122. Prices have come back towards the January peak but shows some selling. Notice the large upper shadow on today's candle pattern? This is a sign that traders sold the early price strength up around $138. We are not 100 percent sure yet but we may be looking at a classic head and shoulders top pattern. Volume was heavy on the decline from the January high and it has been un-spectacular in the rally over the past two weeks even with the buying by Ackman. The weekly OBV line is fairly flat and the slow stochastic indicator tells us that prices are overbought.
In this Point and Figure chart of UTX, below, we can see twin peaks at $138.00. A trade to $140 would be a possible upside breakout and it could open the way to a longer-term advance to the $171 area.
Bottom line -- it is a challenge to try to recognize chart patterns before they actually complete. Is UTX making a double top formation? We may not know for sure until it breaks below $122, the bottom of the trough between what could be twin peaks. Stay tuned.