For his second "Executive Decision" segment of Mad Money Thursday evening, Jim Cramer spoke with Bill Brown, chairman and CEO of L3Harris Technologies (LHX) , the aerospace and defense technology company that is the combination of L3 and Harris Corp.
Brown said the merger has given his company a broad portfolio, a terrific leadership team and cost synergies. He said the mission for defense contractors is shifting into smaller missions. They all require resilient communications that are cross-connected to other platforms.
Brown noted that while their commercial business, which includes aerospace and public safety, was down 5% for the year, they continue to evaluate all of their business units and will divest if needed.
Let's check out the charts.
In this daily bar chart of LHX, below, we can see that prices had a meaningful decline from February into the middle of March. Prices recovered and for a few days they were above the 200-day moving average line. LHX gapped lower Thursday leaving a small island reversal on the chart.
Prices are back below the 200-day line but still above the rising 50-day moving average. Trading volume did not expand from the March low as prices rallied and the On-Balance-Volume (OBV) line declined into May and then only made a lukewarm bounce into June.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has been crossing above and below the zero line since late April and could cross to the downside again in the days ahead.
In this weekly bar chart of LHX, below, we can see that prices are probably going to close back below the declining 40-week moving average line.
The weekly OBV line shows a small bounce in May but is basically pointed down the past four months.
The MACD oscillator just crossed to the upside in May for a cover shorts buy signal - not too convincing.
In this daily Point and Figure chart of LHX, below, it shows a potential upside price target around $286 but in the near-term a retest of the low $180's seems more likely.
Bottom line strategy: Until I see the OBV line turn up strongly telling me that buyers of LHX are being more aggressive, I will recommend deferring new long positions.