Defense stocks General Dynamics (GD) - Get Report , Lockheed Martin (LMT) - Get Report and Northrop Grumman (NOC) - Get Report began momentum parabolic rallies four years ago. Technical charts show the inflated bubbles for these stocks, and the daily charts show how to trade these stocks now.

Northrop Grumman was the first begin its momentum runup from a test of its 200-week simple moving average during the week of Nov. 25, 2011. Lockheed Martin followed from a test of its 200-week simple moving average during the week of Feb. 3, 2012. General Dynamics was last to take off from a test of its 200-week simple moving average during the week of April 26, 2013.

Today, these stocks are dangerously above 200-week simple moving averages and look ready for a reversion to the mean -- a steep fall.

General Dynamics closed at $143.94 on Tuesday, up 4.3% so far in the fourth quarter and up 4.7% year to date. From a test of its 200-week simple moving average at $67.27 during the week of April 26, 2013, to its all-time high of $153.76 set on Aug. 19, this stock was up 128.6%.

Here's the daily chart for General Dynamics.


Courtesy of MetaStock Xenith

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General Dynamics has been above a "golden cross" since Dec. 12, 2012, even before testing its 200-week simple moving average in April 2013. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead.

This chart shows the daily bars for the last 52 weeks. The 50-day, in blue, remains above the 200-day in green.

The stock set its all-time high of $153.76 on Aug. 19 -- then came the plunge that tracked the popping of the bubble of China's Shanghai Composite. Investors and strategists who do not look at charts totally miss this correlation, one that affected every stock in the U.S. markets. From the all-time high to the flash crash low of $132.02 set on Aug. 24, the stock slumped 14.1% in just three trading days.

There were no fundamental or technical reasons for this decline. It was caused by the negative hype of the crash of 2015 in China and a bad decision by the New York Stock Exchange to allow the stock market to open under Rule 48.

The secondary high of $152.51, set on Oct. 28, was in reaction to a better-than-expected earnings report before the opening bell that day. Failure to follow though to the upside is a warning for this stock. Tuesday's low held the 50-day simple moving average of $142.52 and was above the 200-day simple moving average of $141.05.

Here's the weekly chart for General Dynamics.


Courtesy of MetaStock Xenith

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The weekly chart for General Dynamics is positive given a close on Friday, Nov. 13, above its key weekly moving average of $144.45. A close below would result in a downgrade to neutral. The weekly momentum reading is projected to rise to 61.18 this week, up from 58.73 on Nov. 6.

Investors looking to buy General Dynamics should place a good till canceled limit order to purchase the stock if it drops to $104.96 and $101.69, which are key levels on technical charts until the end of 2015.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $145.92 and $153.15, which are key levels on technical charts until the end of November and the end of 2015, respectively.

Lockheed Martin closed at $214.07 on Tuesday, up 3.3% so far in the fourth quarter and up 11.2% year to date. From a test of its 200-week simple moving average at $81.13 during the week of Feb. 3, 2012, to its all-time high of $225.15, set on Oct. 27, this stock was up 177.5%.

Here's the daily chart for Lockheed Martin.


Courtesy of MetaStock Xenith

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Lockheed Martin had been above a "golden cross" set on April 25, 2013, after testing its 200-week simple moving average in Feb. 2012. This "golden cross" came to an end on July 1 and was then re-established on July 24.

The stock set its all-time high of $225.15 on Oct. 27, recovering to new highs after the plunge to the 2015 low of $181.91 during the flash crash open on Aug. 24.

The all-time high occurred as a positive reaction to earnings reported on Oct. 20, after the stock held the 50-day simple moving average of 206.89 that morning. The stock is above its 50-and 200-day simple moving averages of $210.31 and $200.60, respectively.

Here's the weekly chart for Lockheed Martin.


Courtesy of MetaStock Xenith

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The weekly chart for Lockheed Martin is positive but overbought, with the stock above its key weekly moving average of $212.77. The weekly momentum reading is projected to decline to 84.40 this week, down from 86.20 on Nov. 6, becoming less overbought.

Investors looking to buy Lockheed Martin should place a good till canceled limit order to purchase the stock if it drops to $194.32 and $139.39, which are key levels on technical charts until the end of 2015.

There's a key level of $204.15 that can be used as a buy level for more aggressive investors. This level is in play until the end of November.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $232.01 and $239.44, which are key levels on technical charts until the end of 2015.

Northrop Grumman closed at $181.49 on Tuesday, up 9.4% so far in the fourth quarter and up 23.1% year to date. From a test of its 200-week simple moving average at $55.73 during the week of Nov. 25, 2011, to its all-time high of $193.99 set on Oct. 28, this stock was up 248.1%.

Here's the daily chart for Northrop Grumman.


Courtesy of MetaStock Xenith

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General Dynamics has been above a "golden cross" since April 17, 2013, after testing its 200-week simple moving average in November 2011.

This chart shows the daily bars for the last 52 weeks, and the 50-day remains above the 200-day.

The stock set its all-time high of $193.99 on Oct. 28 in reaction to positive earnings reported before the opening bell that morning. Failure to follow though to the upside is a warning for this stock. Tuesday's low was well above the 50-day and 200-day simple moving averages of $173.51 and $165.81, respectively. Note that the flash crash low of $152.31 set on Aug. 24 was briefly below the 200-day simple moving average.

Note that the price gap higher on Oct. 28 has been filled on the recent decline as this stock is 6.4% below its high.

Here's the weekly chart for Northrop Grumman.


Courtesy of MetaStock Xenith

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The weekly chart for Northrop Grumman is positive but overbought, with the stock above its key weekly moving average of $177.80. The weekly momentum reading is projected to decline to 81.05 this week, down from 83.06 on Nov. 6, becoming less overbought.

Investors looking to buy Northrop Grumman should place a good till canceled limit order to purchase the stock if it drops to $170.07 and $143.32, which are key levels on technical charts until the end of November and to the end of 2015, respectively.

There's a key level of $179.15 that can be used as a buy level for more aggressive investors. This level is in play until the end of 2015.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $191.02, which is a key level on technical charts until the end of 2015.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.