LMT Stock: Forever Stock
Last week, the United States retaliated against the Syrian regime by bombarding an airbase with rockets after the Syrian government reportedly used chemical weapons on a rebel-occupied part of the country. Geopolitical tensions are now on the rise, and the word “war” is being floated around by media outlets.
For companies like Lockheed Martin Corporation (NYSE:LMT) that arm the United States military, this presents an investment opportunity.
Despite what many people may think, the onset of war and geopolitical tensions can cause investments like LMT stock to sell off. In many cases, shares pop on the news that a war has begun and then they quickly begin to sell off in the days ahead. This may sound counterintuitive, but the news causes investors to react, and, as retail investors are entering Lockheed Martin stock, savvy investors are heading for the exits.
The good news is that any ill-timed purchases of Lockheed stock have been rectified over time because the bullish advance in stock is ongoing. LMT stock should be classified as a “forever stock” because, over time, it only trends in one direction: up. The following Lockheed Martin stock chart illustrates this dominant perpetual trend toward higher prices.
Chart courtesy of StockCharts.com
It is difficult to refute that a bull market has encompassed Lockheed Martin shares over the past 35 years. This trend toward higher prices contains the quintessential characteristic of a bull market that consists of the price making higher highs and higher lows. This characteristic creates the stereotypical price chart that begins in the lower left and ends in the upper right.
This bullish trend is easily defined using an ascending channel. This channel is created by using two parallel upward-sloping trend lines that serve to define upper resistance and lower support. This channel effectively contains the price of LMT stock as it oscillates between these two trend lines while the bull market continues its advance.
Lockheed Martin shares spent the majority of 2009–2012 trading on support outlined by this ascending channel. In 2013, Lockheed shares began to separate from support. This acceleration in the share price is suggesting that the next logical objective for Lockheed Martin shares is resistance outlined by the ascending channel. This level sits near $400.00, and the longer it takes to achieve this level, the higher the eventual target becomes.
The bullish advance has been supported by the 200-day moving average, and it is illustrated on the Lockheed Martin stock chart below.
Chart courtesy of StockCharts.com
The LMT price chart above illustrates the significance of the 200-day moving average. The 200-day moving average is the dividing line between stocks trading in a bull market and 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. It is common for shares to find price support on this moving average during a bull market.
Lockheed Martin shares have been trading above the 200-day moving average on a sustained basis since 2012. This is when the shares began to accelerate away from support outlined by the ascending channel. This moving average is acting as the crutch that supports Lockheed Martin shares as they trend higher.
I would use this moving average as an opportunity to acquire shares on any price weakness. Every attempt to fall below the 200-day moving average has been thwarted, as buyers are eager to step in and buy shares at this prevailing price level. This is assuming that the bull market in LMT stock is still intact, and that the ultimate target is resistance outlined by the ascending channel. This bullish trend has been in development for 3.5 decades, and I do not see it ending any time soon.
If geopolitical risks begin to escalate, I believe they will inevitably cause a market disruption, and a market correction will ensue. Under such conditions, I would be on the lookout for LMT shares to test the 200-day moving average.
Bottom Line on Lockheed Martin Stock
I am bullish on Lockheed Martin stock because this forever stock has only been trending in one direction: up. There is no reason to believe that this embedded trend will change any time soon and, therefore, I would use any correction down to the 200-day moving averages to accumulate LMT stock.