HON is a stock that just 3 weeks ago made new all-time highs but failed to follow-through on the breakout and started to get some aggressive selling when the indexes received a sell signal. The stock has dropped almost $9 from the highs and is reaching levels of support that should support the stock well.
HON is a strong worldwide company that has been trading since July of last year in a sideways fashion between $52 and $62 and now finds itself, due to the recent breakdown in the indexes, near the low of that trading range.
On a daily closing basis, support is major between 53.15-54.06 as there have been 4 major closing lows over the past 10 months. Intra-day support can also be considered major at 52.05 as that was the lowest low seen over the past 11 months. In addition, the 100-week MA is currently right around 51.80, which makes the $52 level a very strong support. There is no resistance of consequence until the 56.80 level is seen and even then, that resistance must be considered minor. Stronger resistance will be seen up at the 58.80 level.
With the stock closing on the low of the day on Friday and having dropped over $5 last week alone, it is likely there will be follow-through selling on Monday, quite possibly taking the stock down near the $52 level of support.
Purchases of HON between 52.00 and 53.00 and placing a stop loss at 51.60 and having an objective of minimum rally up to 58.00 will offer at least a 4-1 risk/reward ratio.
My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).
My name is Tony and I am a chartist. I have been trading for close to 30 years. In the 80's I was a broker/trader/analyst for Merrill Lynch, Dean Witter, and Pru-Bache.
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