United Technologies (UTX) broke out over its April highs and should be flying high, but it looks like gravity and weakening momentum may be exerting a bigger influence.
In this daily chart of UTX, above, we can see prices have broken above the April highs to refresh the uptrend. UTX is trading above the rising 50-day average and the rising 200-day average. The bullish golden cross of these two averages came well off the bottom. The On-Balance-Volume (OBV) line has moved up with the positive price action since January. Volume by itself has not expanded this month as prices moved up. Bulls like to see volume increase with the trend. The 12-day momentum study has diverged from the higher price highs this month -- price has made a higher high, but the momentum indicator made a lower high. A weakening momentum picture can foreshadow a price reversal, but let's visit the weekly chart.
In this three-year weekly chart of UTX, above, we have mixed signals. Prices are above the rising 40-week moving average line, a plus. But the weekly OBV line has been pointed down since April, suggesting selling into strength. The 12-week momentum study is starting to show a bearish divergence between the higher price and weaker readings vs. the prior rally. UTX could have a bumpy ride if prices fall back below $104.