Raytheon Co. (RTN) was reviewed in early April where I wrote, "While the broad market averages are weak, RTN is showing independent strength. I would keep the same strategy - A strong breakout above $223 on heavy volume is needed to complete the triangle pattern. Risk a close below $205."
Looking at the charts this aftrenoon it shows that we would have gotten "whipsawed" by going long above $223 and then suffering a steep drop in late April/early May to trigger our recommended stop loss order. I hate when that happens.
Let's look at the charts and indicators again to see if we can get it right this time.
(For more on RTN, see Jim Cramer's: These 4 Cold Stocks of Once-Hot Companies Could Reignite.)
In this updated daily bar chart of RTN, below, we can see that prices went from an upside breakout to new highs to breaking below the February lows. Prices rebounded earlier this month but prices have stalled at the underside of the declining 50-day simple moving average line. RTN is still above the rising 200-day day line so the longer-term trend is still bullish.
The movement of the daily On-Balance-Volume (OBV) line is interesting in that it made a new high this month even though prices failed to achieve new highs. The volume of shares traded on up days was heavier this month but it did not have a more positive impact on prices.
The trend-following Moving Average Convergence Divergence (MACD) oscillator looks like it is rolling over to the downside again from below the zero line - this is not constructive.
In this weekly bar chart of RTN, below, going back three years we can see a more positive looking picture than the daily chart above. Prices are above the rising 40-week moving average line. The price action does not show a classic distribution pattern or top pattern.
The weekly OBV line shows only a minor dip recently and the MACD oscillator is in a take profits sell and not an outright sell signal.
In this Point and Figure chart of RTN, below, we can see a break of nearby support and a potential downside price target of $164.39.
Bottom line: RTN has not broken the rising 200-day moving average line nor the rising 40-week line so the longer-term uptrend remains intact. However, the sharp reversal last month could be a wake up call about risk.
A close below the May low and the rising 200-day line are signs that the technical posture of RTN has weakened.