Honeywell International Inc. (HON) is bouncing back from its fourth-quarter decline. The technical indicators are pointed up now, so a bullish strategy is in order. Let's review the latest charts and indicators.
In the daily bar chart of Action Alerts PLUS holding HON below, we can see that the price has rallied back above the bottoming 50-day moving average line. The flat 200-day moving average line is just above the market and a close above $145 will be bullish.
The daily On-Balance-Volume, or OBV line, has improved from late December and it has broken the decline from early October. A strengthening OBV line signals that buyers of Honeywell are acting more aggressively. The Moving Average Convergence Divergence, or MACD, crossed to the upside in early January for a cover shorts buy signal, and now this indicator is crossing the zero line for an outright go long signal.
Another plus: Jim Cramer sees a big upside for Honeywell and other companies in the aerospace sector, with rising demand and the potential for a "monster upside surprise."
In the weekly bar chart of HON below, we can see the price action covering the past three years. Prices are below the declining 40-week moving average line, but a weekly close above $145 will break it. The movement of the weekly OBV line is interesting. It is positive for the past three years and only declined modestly from September to December. It looks like the OBV line has begun to move up again, which is a sign of more aggressive buying.
The weekly MACD oscillator has been narrowing in recent weeks and could soon cross to the upside for a weekly cover shorts buy signal.
In this Point and Figure chart of HON, below, we can see the break of support around $132 and then the quick rally to generate an upside price target of $179 -- a new high for the move up.
Bottom-line strategy: The three charts above give me confidence in recommending the long side of HON. Probe the long side at current levels and on strength above $145. Risk below $135 for now looking for gains to the $160-$165 area and then $179.