BUZ INVESTORS Textron Stock Breakout There are rumors swirling that Lockheed Martin Corporation (NYSE:(LMT) is interested in buying Textron Inc. (NYSE:TXT). As of yet, this rumor is unconfirmed because a spokesperson for Lockheed Martin failed to comment on it. Regardless, this unconfirmed rumor caused Textron stock to leap higher by 3.6%. This surge in price has done a number on the TXT stock chart, which is now suggesting that a higher stock price is a reasonable assumption. This assumption is predicated on the surge in price that occurred on May 11 holding up.
Before I delve further into my analysis, it is worth noting that my views on TXT stock are based on the price action and indications that are captured on its stock chart. This method of investment analysis is known as technical analysis. This method is based on the notion that historical data points can be used to predict future movements in price. At first glance, this may sound ludicrous, but I have found great value in this method of analysis. Perhaps my followers can also attest to the value it provides.
The surge in price has changed the dynamics of the Textron stock chart, and the following price chart illustrates the developments that resulted from the unconfirmed buyout rumors.
This price chart illustrates that a technical price pattern was just completed via a breakout. This breakout occurred as the stock prices exited the price pattern in an upwards direction, suggesting that bullish implications are likely to follow.
This assumption is based on the wave structure that is currently in development. This wave structure is developing above the 200-day moving average. This moving average is popular among the trend-following community because the slope of this moving average is used to distinguish the direction of the predominant trend. It also serves as a dividing line between stocks trading in a bull market and stocks trading in a bear market.
The bullish backdrop I am referring to is illustrated on the following Textron stock chart.
The bullish backdrop in Textron shares slowly began to develop after the financial crisis concluded in the spring of 2009. This bullish backdrop is a price trend of higher highs and higher lows, which is effectively captured using an ascending channel.
An ascending channel is technical price pattern that contains two upward-sloping trend lines. These trend lines are created by connecting the peaks and the troughs, and the trend lines serve to represent support and resistance. TXT stock has been oscillating between these levels of support and resistance for the past eight years, and I do not see anything on the price chart that would suggest that this price action is set to end anytime soon. I find it safe to assume that as long as the share price is confined within these two trend lines, the trend towards higher prices remains intact and is set to continue.
|Industry:||Aerospace & Defense » Aerospace & Defense NAICS: 336411 SIC: 3721|
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|Traded in other countries:||TXT.Germany, TXT.Mexico,|
Textron Inc is a multi-industry company. It is engaged in aircraft, defense, industrial and finance businesses to provide its customers products and services. Its business segments include Cessna, Bell, Textron Systems, Industrial and Finance.
Textron is a $14 billion diversified corporation with business operations serving aerospace, defense, and industrial markets. The best-known brands under Textron’s corporate umbrella include Cessna (business jets) and Bell (helicopters). Although Textron continues to diversify its portfolio of operating businesses, aerospace and defense still drives about 75% of sales. The company employs 35,000 people.
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