United Technologies (UTX) has had a good recovery rally this year and while we could see a corrective dip near-term, an upgrade from TheStreet's Quantitative Service reflects a more positive picture longer term.
This daily chart of UTX, above, has a number of positive clues from our lagging indicators, but our leading indicators point to a pullback. UTX rallied above the 50-day simple moving average line in late January and the average line turned positive in March. March is also when UTX crossed above the 200-day average. In April, we witnessed the 50-day crossing above the 200-day for a golden cross. All these signals are late. The On-Balance-Volume (OBV) line has inched up from its January low but the response is tepid.
Our leading indicator -- momentum -- is telling us that the rally has slowed and a downward correction could materialize. The higher price highs seen in February and then March/April were made on weaker momentum readings. A pullback to $100 or lower would not be a surprise right now.
This weekly chart of UTX, above, shows a new buy signal from the Moving Average Convergence Divergence (MACD) oscillator as it crosses above the zero line. The OBV line on this time frame looks more forceful. Prices are above the 40-week moving average line but its slope has not (yet) turned positive. Chart resistance can be seen from $110 and up.