Defense is Defending Itself
- Posted by Greg Harmon
- on May 30th, 2012
Defense stocks have been a good short since breaking down in late April. The last week they have been basing and now are finally trying to defend themselves. Are they strong enough to fly higher or will they crash on takeoff. Take a look at these three on the tarmac and rolling toward the runway.
Lockheed Martin, $LMT
Lockheed Martin, $LMT, peaked at the end of April and after breaking down out of the expanding wedge has been consolidating around the pattern break target of 83.25. This could be a pause before the next Measured Move lower to 78.80. But the Moving Average Convergence Divergence (MACD) indicator is about to cross positive with a lower Bollinger band curling higher a Relative Strength Index(RSI) recovering from an oversold condition. These are reversal signals and should they continue and price rise over 84 look for a new move higher.
Northrop Grumman, $NOC
Northrop Grumman, $NOC, made a similar late April top before falling out of the rising wedge. The move lower is finding support and again this could be a bear flag before a Measured Move lower to 53.10. But there are signs of a reversal here as well. The RSI is trending higher with a MACD that is about to cross positive. A move over 59.75 will confirm a next leg higher.
Raytheon, $RTN, is the best looking of the three. After a break of a 8 month trendline support, it found support at 49.50 and is consolidating. A further breakdown could take it to the Measured Move at 45.20. But the RSI making a new higher high with the improving MACD suggest a turn maybe in the works. The volume on Wednesday’s candle was relatively strong and, also a good signal. Look for a close over 51 to signal a change in trend back higher.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- The Cup Looks Full on Sally Beauty Holdings
- My Thoughts on A Possible Pullback on the S&P 500 (video)
- Top Trade Ideas for the Week of September 15, 2014: Bonus Idea
- Top Trade Ideas for the Week of September 15, 2014: The Rest
- Top Trade Ideas for the Week of September 15, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 15, 2014: The Best
- SPY Trends and Influencers September 13, 2014
- Macro Week in Review/Preview September 12, 2014
- How to Adjust to the Roller Coaster Market
- Watching DirecTV for a Sunday Ticket Higher