LMT Stock: Testing Support
I am a huge fan of Lockheed Martin Corporation (NYSE:LMT) stock, and it is not because I am a proponent of war.
As an analyst who uses technical analysis as my primary tool to search out prospective investments, I look for tickers with certain attributes that I find appealing. This process keeps my strategies disciplined. It is also how I stumbled upon the LMT stock ticker.
The Lockheed Martin stock chart is an exceptional example of an investment that can be placed into a long-term portfolio using a buy-and-hold strategy. This strategy differs from the usual strategies I employ, but this example serves to illustrate that LMT stock has over time only gone in one direction: up. Given the volatility experienced in equities with regards to boom-bust cycles, this type of performance is not always easy to come by.
The following chart illustrates the long-term trend in Lockheed Martin stock.
Chart courtesy of StockCharts.com
The chart above illustrates a trend that has been in force since 1982. This trend is now 34-years-old and still shows no signs of abating. It is this chart that has me so enamored with LMT stock.
The pattern illustrated above is an ascending channel. There are two identical parallel lines that define this trend. These two trend lines define the upper and lower bounds, and the share price oscillates between these two lines for as long as the trend permits.
Lockheed Martin stock has constantly bounced off each of these levels of support and resistance. Each and every rally or selloff was halted in its tracks when these levels were attained, and a trend reversal soon followed.
LMT stock is currently sitting in the middle of this channel, so it is difficult to say with certainty which direction shares are heading, based on the chart above. The chart below illustrates Lockheed Martin stock on a shorter time scale and provides a clearer picture.
Chart courtesy of StockCharts.com
In 2012, LMT stock generated a golden cross. A golden cross is a bullish signal that is produced when a 50-day moving average, highlighted in blue, crosses above a 200-day moving average, highlighted in red. This indicates that the prevailing trend to come will be toward higher prices as momentum is now controlled by the bulls. In essence, when a golden cross is generated, traders use this signal to indicate that a bull market is on the horizon.
The golden cross was generated as LMT was trading at the bottom of the ascending channel, and it was effective in indicating that the trend toward higher prices was upon it. LMT stock is up 258% since that signal was given. Even more impressive is that this signal is still intact after 4.5 years, and it has yet to terminate.
The 200-day moving average has served as a level of support as well as a signal indicator. The 200-day moving average is the dividing line between stocks trading in a bull market versus stocks trading in a bear market. When the share price is above the moving average, it is bullish; when the share price is below the moving average, it is bearish.
Since the golden cross was initiated, the 200-day moving average has become a level of support as Lockheed Martin stock trends higher. Using the 200-day moving average as an effective strategy would call for the accumulation of shares when this trend line is being tested. A break below this level over a five-day period would give me concern that the trend higher has stalled but, until that event occurs, I can only assume a bullish outcome based on the signals that are currently in play.
The Bottom Line on Lockheed Martin Stock
I am bullish on Lockheed Martin stock, and my bias is based on the charts provided above. LMT stock is currently testing the 200-day moving average and this moving average has proved to be a strong level of support during this bull run.