Raise Stops to Lock in Gains on Parker Hannifin

 | Dec 05, 2017 | 12:42 PM EST
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We reviewed Parker Hannifin Corp (PH) in late April, and we said, "The trend is still up for PH but there are some signs of weakness. Longs from $150 should raise their sell stops to a close below $152. We might still reach our $180 price target." Prices traded sideways for the next four months until a fresh advance began in September. Prices have reached and exceeded our $180 price target, so another look at PH is warranted.

In this updated daily bar chart of PH, below, we can see that sideways consolidation pattern -- where prices moved back and forth around the flat 50-day moving average line. Prices tested the rising 200-day line in August and turned up to break out in September. PH is above both the rising 50-day and the bullish 200-day averages.

The pattern of volume looks like it has declined since September and the On-Balance-Volume (OBV) line does rise from August, but it has stalled from mid-October. The Moving Average Convergence Divergence (MACD) oscillator turned down in early October and only just started to improve in recent days.

In this weekly bar chart of PH, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line has been rising since early 2016 and continues to confirm the advance in PH. The weekly MACD oscillator is above the zero line, but it has narrowed towards a possible take-profits crossover.

In this Point and Figure chart of PH, below, we can see the uptrend and a possible longer-term price target of $217.38. A decline to $176.97 will likely weaken this chart and a trade up to $191.64 will be a fresh breakout.

Bottom line: I cannot really put my finger on something particularly bearish about PH, other than volume shrinking on the most recent leg up, but I would recommend that longs raise their sell stop protection to a close below $180.

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