We last reviewed Illinois Tool Works (ITW) in depth in late April, and our conclusion was, "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."
Prices rallied in May and June and touched $150 before a correction. Our suggested sell-stop was out of the way as prices only corrected to $135. A new rally began in late August and now prices are close to our $156 price target.
Let's check the latest charts and indicators to see what is in store for the next few months.
In this daily bar chart of ITW, above, we can see that prices are above the rising 50-day moving average and the rising 200-day moving average. The daily On-Balance-Volume (OBV) line has made a new high to confirm the new price highs. Price momentum has slowed in the past week or so but that is not a serious divergence that is problem waiting to happen.
In this weekly bar chart of ITW, above, we can see that prices are above the 40-week moving average line. The average line was successfully tested in August. The trend is up! The weekly OBV line made a new high recently to match and confirm the new price high. The weekly Moving Average Convergence Divergence (MACD) oscillator in the bottom panel has crossed to the upside above the zero line for a fresh outright go long signal.
In this Point and Figure chart of ITW, above, we can see the long advance with all the corrections along the way. Prices just broke out of a double top and there is a new upside price target of $187.
Bottom line: ITW is still pointed higher. Traders and investors could raise their sell-stops to a close below $140. Our upside price targets are $156 and $187.