Early last year Honeywell International (HON) - Get Report made a $90 billion hostile takeover offer for United Technologies . It would have been the largest deal in the history of the aerospace industry but United Technologies CEO Gregory Hayes successfully defended against it, saying he didn't believe antitrust regulators would approve the merger. He apparently does not have the same concerns about UTX buying Rockwell Collins (COL) for $30 billion plus debt, a deal which was announced Tuesday and will be the largest ever in the industry.
At this point in the session, shares of United Technologies are down 4.5% and Rockwell Collins shares up one half percent. So what is the technical outlook for Honeywell? Let's take a look at the chart.
The daily time frame illustrates the 20% year-to-date rise in Honeywell. This month, however, the stock has been moving in a sideways consolidation above horizontal support in the $135 area. This zone of support is also being reinforced by the rising 50-day moving average, an uptrend line drawn off the lows of the last four months.
Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and is trending lower on both time frames. These readings represent a loss in short-term momentum and positive trend direction. The stochastic indicator suggests the stock is near-term overbought. Overall volume has been declining for the last month, the accumulation/distribution line has dropped below its 21-period signal average, and Chaikin money flow is in negative territory.
The long-term trend is higher but at the present time the chart has a neutral bias. A new high with improving volume and positive money flow re-establishes the trend, but a break below the support zone confirms the negative technical indications, and could take the stock back down to retest its rising 200-day moving average.
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The author is an independent contributor and at the time of publication had no position in the stocks mentioned.