Honeywell (HON) was reviewed in early November, when we wrote, "In this Point and Figure chart of HON we can see that prices have met an upside price target. Prices could continue higher, but a period of sideways consolidation would be welcomed. HON is still in an uptrend, but momentum slowed last month. Traders could raise their sell stops to a close below $140 from a close below $136."
Looking over the updated charts this morning, I can quickly see that traders should be still long, as prices never got close to the $140 area and have surged to new highs. Let's see what the indicators look like now.
In this daily bar chart of HON, below, we can see that prices are above the rising 50-day moving average line and the rising 200-day line. The On-Balance-Volume (OBV) line has been moving up with the price action confirming the strength and signaling aggressive buying and accumulation. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish configuration above the zero line.
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 is pointed up and the MACD oscillator is also bullish.
In this Point and Figure chart of HON, below, we can see that prices have nearly doubled from their 2015 nadir and they have overshot a price target. Over-running a price objective is not a reason to sell, but suggests that prices are extended and could probably use a period of sideways consolidation.
Bottom line: I try to think about risk more than reward, so I would suggest that traders raise their sell stop protection on HON to a close below $146. I would look for HON to trade up towards $200 in the months ahead, but only after a period of consolidation.