Like many stocks this year, Eaton (ETN) has corrected lower and is trying to bottom, but the technical clues so far are not clear.
ETN peaked and rolled over this past May and June, according to the chart above. Prices broke below the flat 50-day moving average. The On-Balance-Volume line (OBV) turned lower in May and continues on a "glide path." An upturn in the OBV line would be a positive for the bulls. Unlike many stocks that bounce temporarily to the upside before they resume their decline, ETN traded sideways before the next decline.
There are two positives in this chart. First, in September and October the volume of shares traded is relatively heavy as ETN has bounced off the $50 area three times. One way of interpreting this trend is that buying interest in ETN is as aggressive as the selling interest. Volume is relatively heavy and prices are holding steady. Another positive clue comes from the momentum indicator. As prices sank lower in August and September, the momentum readings made higher lows -- this tells us that the rate of price declines has slowed. This is called a bullish divergence and can foreshadow higher prices ahead.
In the longer-term chart of ETN above, we see how ETN rolled over starting in late 2013. Prices have declined down to a former resistance area from early 2012. Former resistance levels can do a role reversal and become a support area. We'll be watching to see if that does indeed happen with ETN.