HON Stock: Abiding by Technical Support
I am focusing on a very special investment in Honeywell International Inc. (NYSE: HON) stock because it is indeed a perfect example suggesting that sometimes, the most simplistic characteristics are the most compelling ones. These characteristics have defined the move towards higher Honeywell stock prices over the past 13 months, and as a result, HON stock continues to defy gravity, forging a consistent series of new-all times highs.
For those who frequent my work, I probably sound like a broken record, so let me quickly point out that I generate my views on an investment by analyzing the company’s stock chart. This method of analysis is called technical analysis and it is predicated on the notion that historical prices and volume data points can be used to forecast what the future may bring. The characteristics that I spoke of with regards to Honeywell stock are all technical in nature, meaning that it abides by the rules set out by technical analysis.
Before I begin with the chart, let me point out that Honeywell stock is currently in its thirteenth month of consecutive gains, and that fact in itself is awe-inspiring.
This awe-inspiring move has been supported by a technical tool that is illustrated on the following stock chart.
Chart courtesy of StockCharts.com
This stock chart illustrates that since October 2016, an impeccable bullish trend has been in development. The trend contains the quintessential characteristic that is used to define all bullish trends, which is a sequence of higher highs followed by higher lows.
The price action has been so pristine that a simple uptrend line, which has been created by connecting the sequence of higher lows, outlines this entire bullish trend. Not only does the uptrend line outline the bullish trend, but it also acts like a significant level of price support.
Based on the number of times this level of price has been tested, I feel safe saying that as long as HON stock is trading above this uptrend line, I will have the inclination to believe that higher prices will prevail. Trading below this uptrend line, on the other hand, would be a cause for concern because it would suggest that the bullish trend is losing steam, potentially suggesting that a correction is set to ensue.
Luckily, the uptrend line is not the only indication supporting this awe-inspiring move. The following HON stock chart illustrates the other influential technical indications that have been supporting this move towards higher stock prices.
Chart courtesy of StockCharts.com
This stock chart illustrates that shortly after the bullish trend began, a death cross was averted. A death cross is a bearish indication that is created when the faster 50-day moving average, which is highlighted in blue, crosses below the slower 200-day moving average, which is highlighted in red.
To simplify things, a bearish cross suggests that a bear market is in development, and a stock’s inability to generate this bearish signal is a testament to its bullish strength. Averted signals are not uncommon, and when they do appear, it is wise to pay heed because a substantial move usually follows.
I have already established the characteristic that defines this bullish trend, but what this price chart illustrates is that HON stock has been finding support at its 50-day moving average. Any time the 50-day moving average has been tested, buyers have stepped in to support it.
What makes this price chart equally impressive is that once the death cross was averted, the moving averages that almost created this signal have moved into bullish alignment, and have remained there in an impressive manner. Currently, there is little to suggest that the bullish implications suggested by this indicator will end anytime soon.
The bullish line towards higher Honeywell stock prices has been supported by a simple uptrend line, which is being reinforced by the 50-day moving average. With little to suggest that this bullish trend in HON stock is going to end anytime soon, I can only assume that the impressive bullish trend, which has accumulated 13 consecutive months of gains, is set to continue.