HON had the lowest weekly close since Apr07 and looks like it wants to head lower. Even with the strong index rally on Friday, the stock was unable to rally sufficiently from the lows at 53.50 to prevent the break of weekly support at 54.69. A sell signal was generated and if confirmed next week with another close below 54.69 will likely cause the stock to drop down to the 100-week MA at $50. The daily chart did not have a breakdown on Friday as the lowest daily close since Apr07 has been 53.09, nonetheless, it did break below the most recent low close at 55.22 and therefore shows continuation of the recent downtrend the stock has been having. Rallies up to the 55.22 level, on a daily closing basis, are possible but if the stock continues to close below that level, pressure will continue. Should the indexes reach their upside goals on Monday or Tuesday and then start to come down (as I expect they will), HON will likely head lower and confirm the break next Friday.
The price was pushed down hard on Friday because someone decided to sell a lot of stock. The volume was almost 12 million shares, versus a normal volume of around 5 million. They got it sold, but depressed the price. Unless this type of selling continues, I would expect the price to rebound $1-2 over the next two trading days, subject of course to the bias of the general market.
Well, big traders buying or selling is the key to chart trading. Evidently, when there is enough selling to depress the stock, it usually means there is a reason the big seller sold.
As far as the market. Let me state that I totally saw yesterday's rally coming. In my newsletter on "Sunday" I stated that I expected to see a rally that would take the DOW up to 12552. With the fact the DOW closed yesterday at 12548, I would have to see that I "nailed" it.
By the same token, I also stated this rally would take the DOW to the top of a downtrend channel in place and that yesterday would be the high of the DOW rally. From here on in, I expect the DOW to trade generally downward, with peaks and valley along the way, and get down to 11573 within the next 8 weeks.
I no longer think the same kind of volatility that we saw over the past few weeks will come back but there is no reason to buy the market at this time.
I think a "channel downtrend" is in effect with ranges of around 1000 points from high to low. The previous range was 12700-11700 and this one will be 12600-11600, and so on and so forth.
So if HON is depending on the stock market to get more of a rally than was seen yesterday (which by the way I also predicted and stated the rally would fall short of closing above 55.22), then the stock is in problems.