The last time we discussed the charts and indicators of Raytheon Co. (RTN) was back in late June, when we considered the senior averages vulnerable. At that time we said, "With the broad market looking more vulnerable over the past three weeks it would be prudent in my mind to raise sell stops. The levels I would focus on to reduce my exposure are $156 and then $152." Raytheon acted independently strong and continued to rally through the summer and into the fall and our sell stops were never elected.
In the past three months, however, the price of Raytheon has leveled off and some signs of weakness have shown up. Let's dig into the charts to see what strategy makes sense into the end of the year.
In this daily bar chart of RTN, below, we can see that prices have been trending sideways instead of up and RTN has been crossing above and below the flattening 50-day moving average line. The slower-to-react 200-day moving average line is still rising and well below the market. The On-Balance-Volume (OBV) line has been flat the past four months and is not foreshadowing new price highs with its own new high. The trend-following Moving Average Convergence Divergence (MACD) oscillator gave a take-profits sell signal back in the middle of August and is turning down toward the zero line and a potential outright sell signal.
In this weekly chart of RTN, below, we can see that prices are above the rising 40-week moving average line. It looks like volume has been declining since the beginning of the year but the weekly OBV line has been rising and is still pointed up, unlike the daily OBV line. The weekly MACD oscillator crossed to a take-profits sell signal in the middle of October.
In this Point and Figure chart of RTN, below, we see that a $169 price target has been reached and that a decline to $178.74 would be a new low for the move down and probably would weaken the chart. With a fair amount of volume (left side of the chart) in the $177-$187 area, a decline below $177 will put a lot of recent longs "under water" and could precipitate further weakness.
Bottom line: There is some chart support around $180 for RTN, but a break of that support is possible as prices have been unable to break above $190 in October and late November, forming what could be considered a small double top. Traders strongly should consider raising sell stop protection to a close below $180 and investors should consider a close below $170 as the point to reappraise their position.