Investors' worries about Honeywell (HON) seem to have subsided as all is seemingly well at the company -- at least for 2017.
After lowering financial guidance for the third quarter and the rest of the fiscal year on Oct. 7, CEO Dave Cote says he was "wrong" for not doing a better job of communicating a more positive story for 2017.
"The long-term message seemed to have gotten lost," Cote told TheStreet's Jim Cramer on CNBC's Mad Money Thursday evening. "On guidance for the year, we started off at 6% to 10% [earnings per share], we took it to 8% to 10% in July, and now we made it 8% to 9%, which is hardly dire."
Investors and analysts seemed to have focused on the current weakness in aerospace. Cote elaborated on this situation Thursday, and the picture doesn't look nearly as bleak as before. The bizjets market is declining, but the outgoing CEO said commercial is "still doing fine" and defense and space will also "do fine."
While the third quarter may not be necessarily a bright spot for Honeywell, Cote is confident that "2017 is going to be good."
Cote's comments seem to have restored some confidence in the industrial conglomerate, with the shares rising slightly during the trading session Friday morning. But is this a reflex rally or a buying opportunity?
Real Money's technical analyst Bruce Kamich examined Honeywell's daily chart and noticed that after the initial downside "shock" earlier this month, prices stabilized instead of spilling lower. And with prices having gaped to the upside this morning, Kamich said that a fresh look at HON is warranted.
In the daily chart, above, Kamich can see the gap lower and the gap higher. "Without knowing what happens next we may have a possible island reversal pattern," Kamich said. The technical analyst added that prices would have to continue higher from here to give us confidence that a reversal is taking place. While that sounds easy enough, there are some technical roadblocks.
The first roadblock is the underside of the 200-day moving average line; this mathematical trend line can act as resistance, Kamich noted. The second roadblock is the $100 to $112 area that acted as support in March, May, June and September, which may reverse roles and act as resistance now.
