Nuts and Bolts Trading in Illinois Tool Works
- Posted by Greg Harmon
- on October 31st, 2012
Illinois Tool Works, $ITW, has been beaten up lately in some press stories, for some insider selling. Who knows why insiders sell. To pay their kids tuition, buy a new house, pay their tax bill. News may or may not be discounted already so it is a whole lot easier to just look at the price action to see if this stock is a buy. From the daily chart below you can easily see that it has been consolidating in the blue box between 58 and 61.50 since it moved above the resistance level at 57.50 that extends back to July 2011. A healthy consolidation after making new highs. But there
Illinois Tool Works, $ITW
are several signs that it may be ready to move higher after 2 and a half months in that box. First the 50 day Simple Moving Average (SMA) is giving it a lift. Next the Relative Strength Index (RSI) is making a new higher high. Third the Moving Average Convergence Divergence indicator (MACD) is positive for the first time since late August, moving there from negative 2 weeks ago. all it needs now is a trigger, a move over 61.65, to signal a buy. From there it ha a Measured Move higher to 73.60. it will not move there in a straight line, but the 2.5% dividend yield should compensate you adequately to give it some time.
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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)
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