What's Next for Honeywell as the Stock Rallies?

The firm beat on its quarterly results on the strength of its aerospace division.
Stocks quotes in this article: HON

Honeywell International (HON) reported strength in their aerospace division Thursday morning and the stock was trading higher. I reviewed the charts of HON on Tuesday and wrote that "I have no special knowledge of what Honeywell will tell shareholders and fundamental analysts on Thursday, but the charts and indicators suggest to me that we could see price gains in the weeks ahead. Risk to $191 on new longs."

Unfortunately prices declined Wednesday to break the $191 level. Let's check and see if I had the right idea but the wrong stop loss order.

In this daily bar chart of HON, below, I can see Wednesday's decline and I can imagine Thursday's anticipated early bounce to the upside. Prices closed below the 50-day and the 200-day moving average lines yesterday but we could see prices rebound today. The trading volume increased on Wednesday but it was not a huge surge.

The On-Balance-Volume (OBV) line shows a minor dip. The Moving Average Convergence Divergence (MACD) oscillator is slightly above the zero line but poised to cross to the downside.  

 
In this weekly Japanese candlestick chart of HON, below, the jury is out. Prices are below the 40-week moving average line but a close above $200 will be bullish. The weekly OBV line is up from a low in March. The MACD oscillator is trying to get back above the zero line.
 
 
In this daily Point and Figure chart of HON, below, I can see Wednesday's decline and the software did not change its upside price target. A trade at $201.41 will refresh the uptrend.
 
Bottom line strategy: Today (Thursday) I will be watching to see if HON makes a two-day reversal - a low close Wednesday followed by a high close Thursday. If that happens I would recommend purchases above $201.41.
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TAGS: Investing | Stocks | Technical Analysis | Aerospace | Technology | Industrials | Manufacturing | Earnings

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