Honeywell Might Keep the Dow Buzzing

Traders and investors could go long HON as it joins the DJIA club.

In a column this week, Jim Cramer looked at Raytheon Technologies (RTX)  getting swapped out of the Dow Jones industrial average by long-time Cramer favorite Honeywell (HON) .

Cramer said this change was the least surprising of those announced, as Raytheon's merger with parts of the old United Technologies made it too similar to another Dow component, Boeing (BA) . Honeywell, on the other hand, is an innovation machine in a host of synergistic industries. Cramer called the company a true industrial.

Let's check out the charts of HON.

In this daily bar chart of HON, below, we can see that prices have been "saw-toothing" higher from the March low. Prices are above the rising 50-day moving average line and recently above the bottoming 200-day moving average line. The trading volume has been active since March and the On-Balance-Volume (OBV) line has been moving higher with the price action. A rising OBV line tells us that buyers of HON are being more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator shows a bullish trend from late May. 

 

 

In this weekly bar chart of HON, below, we went back four years. The chart shows a widening pattern or better known as a broadening pattern from 2017. HON has made higher highs and lower lows the past three years. If the pattern holds we should see HON go on to make a higher high this year. Prices are above the bottoming 40-week moving average line. The weekly OBV line has been steady since early 2019. The MACD oscillator is about to cross the zero line for a buy signal on this time frame. 

 

 

 

In this first Point and Figure chart of HON, below, we used daily price data and the chart shows a potential price target of $193.  

 

 

 

In this second Point and Figure chart of HON, below, we used weekly price data and here we can see a potential price target in the $257 area. 

 

 

 

 

 

Bottom line strategy: Traders and investors could go long HON or add to longs at current levels. Risk a close below $154 for now. $193 and then $257 are our price targets. 

 

(HON is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells this stock? Learn more now.)

 

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