A Real Money subscriber recently asked for a technical update on Raytheon Technologies (RTX) . Let's see if anything has changed since our last review.
In our last review of RTX back on May 19 we wrote that "The other day we wrote 'Continue to hold longs. Raise stops to $81 for now. After $87 our next targets are $100 and then $111.' Today we can add the $150 area as a longer-term objective."
In the updated daily bar chart of RTX, below, we can see some softness in prices since early June. Prices have slipped below the 50-day moving average line as momentum has slowed.
Trading volume has diminished over the same time period and the On-Balance-Volume (OBV) has declined to tell us that sellers of RTX are now more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed below the zero line for an outright sell signal.
In the weekly Japanese candlestick chart of RTX, below, we see some developing problems. A doji in early June has been followed by bearish confirmation for a top reversal. So far the reversal has changed the trend from up to sideways. The slope of the 40-week moving average line is still positive.
The OBV line is a problem as it has made a lower high than the November high for a bearish divergence when compared to the price action. The MACD oscillator is crossing to the downside for a take profit sell signal.
In this daily Point and Figure chart of RTX, below, we can see a potential upside price target of $99.
Bottom-line strategy: RTX may be a good example of what we expect in the second half of 2021. In our mid-year review we suggested that the odds were increasing for a correction and RTX is starting to fit the bill. Prices have stalled and turned lower. Our $87 price target was reached but our objectives of $100 and $111 are going to wait. With the MACD oscillator sell signal on the daily chart traders should raise sell stops to $83 from $81. This is only a small move but it fits in with my view.
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