United Technologies (UTX) has rallied to the top of its trading range in effect since August. What's next?
In this daily chart of UTX, above, we can see the up-and-down swings of the past 12 months. Since August, shares of UTX have traded sideways, roughly bounded by $85 on the downside and around $100 on the top end. The price of UTX is currently hovering at the top of its recent range. Prices have been strong enough to exceed the 50-day and 200-day moving averages, and the slope of the 50-day is now positive. Volume is the weapon of the bull, and unfortunately volume and the On-Balance-Volume (OBV) line has been boring -- except for one burst at the end of February. If UTX was to breakout over the highs of October and March, we would want to see volume expand significantly. Momentum is a problem for the bulls, too. Prices made highs in February and slightly higher highs in March, but the momentum indicator made lower highs -- telling us that the rate of advance slowed.
We are seeing mixed signals from this weekly chart of UTX, above. Prices are above the 40-week moving average line, but the slope of the line is still very bearish. The OBV line on this time frame is pointed up, but is below the highs of 2015. In the bottom panel, we can see a long-term bullish divergence between the price action and the momentum study -- the decline slowed. Prices could push higher and breakout of the trading range, OR we could stall and pullback. I feel like sitting this one out for a few days, until the market makes up its mind.