LMT Stock: Trumped
Donald Trump is up to his shenanigans once again and he is using his Twitter account to share his thoughts. His aims are now centered around Lockheed Martin Corporation (NYSE:LMT) and the fighter jet contract that has experienced cost overruns. He went as far as even suggesting that Boeing Co (NYSE:BA) should price out a similar contract. His tweet was effective in sending shivers down investors’ spines as LMT stock is trading lower from his remarks.
I have outlined in my previous report that I am bullish on LMT stock because the bullish trend is impeccable, and that as long as LMT stock continues to maintain a certain level, higher prices are to be expected. This level is so significant that whenever this level has been tested, it has proven to be an opportunity to acquire Lockheed Martin stock.
Donald Trump is going to be the man in charge for the next four years, so when he does make comments regarding government contracts, it is wise to pay heed. I have no doubts that the new President-elect’s comments made over Twitter will put a damper on the price of Lockheed Martin stock. The question remains with regards to the size of this damper, and as a result, it is imperative to revisit the LMT stock chart to see where this important level stands.
The following Lockheed Martin stock chart illustrates the moving average that has supported the stock price for the past five years.
Chart courtesy of StockCharts.com
The Lockheed Martin stock chart above illustrates the importance of the 200-day moving average. This 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.
LMT stock has been trading above the 200-day moving average on a sustained basis since 2012 and it has become a level of support as Lockheed Martin stock trends higher. Using this moving average has been an effective strategy to accumulate LMT stock whenever this moving average has ever been tested.
I am afraid that the comments dished out from Donald Trump on Twitter may put this moving average at risk. Donald Trump has already been deemed responsible for an equity rally that has shattered records, so I will not take any comments he says with a grain of salt.
The 200-day moving average currently sits at $240.00, and if this moving average fails to support LMT stock, it may put the longer-term trend to a test. The following Lockheed Martin stock chart illustrates this trend.
Chart courtesy of StockCharts.com
The Lockheed Martin stock chart above illustrates a bullish trend that is 34 years in the making, and it is the impeccable trend I am in awe of.
The pattern that makes up this bullish trend 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 time permits.
Lockheed Martin stock has constantly bounced off each of these levels of support and resistance. Each and every rally or sell-off was halted in its tracks when these levels were attained, and a trend reversal soon followed. I originally believed that the upper trend line was going to be tested but I now fear that Donald Trump may have put a damper on this belief. It seems as though he is setting his sights on this company, and this could potentially put all the major military contracts in jeopardy as the new president tries to curb costs.
Bottom Line on LMT Stock
Donald Trump is using his Twitter account to share his thoughts regarding government defense contracts, and as a result, it has caused LMT stock to sell off. I am still bullish on Lockheed Martin stock contingent on the basis that it continues to trade above the 200-day moving average.