Honeywell International Inc. (HON) recently broke out above its January zenith but it has stalled. Has it stalled because the broad market has weakened? or has it stalled independently? Let's check out the charts and indicators to see if we can answer that question.
In this daily bar chart of HON, below, we can see that HON started a rally in late June that has carried up into early October. Prices are above the rising 50-day moving average line and above the rising 200-day line. In August the 50-day line rallied above the slower-to-react 200-day line to generate what is commonly called a (bullish) golden cross. What is really interesting about this chart is that the daily On-Balance-Volume (OBV) line has been moving higher the past twelve months. Even when prices were soft from February to June the OBV line continued moving up and signaling that buyers of HON were more aggressive than sellers. In the bottom panel is the Moving Average Convergence Divergence (MACD) oscillator which gave a buy signal in late July. This indicator shows a peak in the middle of September with a take profits sell signal.
In this weekly bar chart of HON, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line has been strong the past three years and there is no hint of weakness. In the lower panel is the MACD oscillator which is in a bullish configuration.
In this Point and Figure chart of HON, below, we can clearly see the breakout to a new high. A $175 price target is projected.
Bottom line strategy: HON is likely to be dragged lower in the short-run. HON could dip to around $160 but there I would look for buyers to emerge again.
(Jim Cramer noted on Friday's Mad Money program that the company's analyst day is Wednesday and that it's not a great time to be holding industrials.)