Ingersoll-Rand Is Toppy and Vulnerable

 | Dec 05, 2017 | 3:48 PM EST
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We last looked at Ingersoll-Rand PLC (IR) in early November 2016. Prices have exceeded our longer-term price target of $85 but the price action in the past six months has weakened and the best levels for IR look to be behind us.

In this daily bar chart of IR, below, we can see a peak in July around $94 and another high in October that only briefly pushed up to $96 before retreating. I would consider this pattern a possible double-top formation. Since July, IR has traded sideways around the 50-day moving average line -- it has crossed below and above and then below again. Prices are still below the 50-day average line and now the slope of the average is bearish. IR is also below the 200-day line, which is peaking. 

The On-Balance-Volume (OBV) turned down in May before prices peaked and it has been in a downtrend since. This weakness in the OBV line even when prices rallied to the second high tells us that sellers of IR have been aggressive. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish configuration below the zero line.

In this weekly bar chart of IR, below, we can see that prices are below the cresting 40-week moving average line. The weekly OBV line is neutral but close to a turn lower. The weekly MACD oscillator is close to crossing below the zero line for an outright sell signal.

In this Point and Figure chart of IR, below, we get a different look at this top pattern. A downside price target of $72 is shown.

Bottom line: IR looks increasingly vulnerable. A close below $83 is likely to precipitate further losses. Longs should take appropriate action.

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