Illinois Tool Works (ITW) gaped higher Monday extending its long-running uptrend. Prices are close to a double from their early 2016 lows so it's prudent to check our indicators and the latest charts to see if we should raise our sell stops to lock in further gains.
No matter how strong the uptrend it is always a good strategy to check the tires and gauges to see if everything is on track and to make any adjustments.
In this daily bar chart of ITW, below, we can see a very tradable uptrend over the past 12 months. Like a number of strong performers yesterday, ITW gaped higher continuing its uptrend with strong volume.
ITW is above the rising 50-day moving average line as well as the rising 200-day moving average line. Dips below the 50-day average line toward the 200-day line were buying opportunities. The daily On-Balance-Volume (OBV) line has risen steadily the past year, telling us that buyers of ITW were more aggressive showing heavier volume on days when ITW closed higher. The Moving Average Convergence Divergence (MACD) oscillator turned up recently from the zero line to a fresh outright go long signal.
In this weekly chart of ITW, below, we can see the price movement of the last three years. ITW is firmly above the rising 40-week moving average line. Declines toward the rising average line were, with hindsight, a buying opportunity.
The weekly OBV line has been rising since late 2015 and tells us that there has been strong accumulation of shares for a long time. This kind of buying can support much higher share prices. The weekly MACD oscillator has been in bullish territory since early 2016 and it looks like it is crossing to the upside again to a fresh buy signal.
In this Point and Figure chart of ITW, below, we can see the 2014-2016 consolidation and the huge rally after the breakout at $95.50. Prices are extended but we still have an upside target around $156. I would not rule out a high-level consolidation pattern in the weeks ahead and fresh upside price targets.
Bottom line: ITW is still pointed higher and longs could consider raising their sell stop to a close below $130. Our potential price target is $156 and I would not be surprised if we saw a $150-$160 consolidation pattern before further gains.