United Technologies Corporation (UTX) is a component of the Dow Jones Industrial Average that may not last through 2019 as a Dow stock. The company recently announced plans to break up into three independent entities. The United Technologies name will remain for its Pratt & Whitney aerospace enterprise combined with newly acquired Rockwell Collins. Otis Elevators will be separately traded, as will Carrier, which makes air conditioning systems and fire and security products.
United Technologies stock closed last week at $113.90, up 7% so far in 2019 but in bear market territory at 21% below its all-time intraday high of $144.15 set on Sept. 21. The stock set its 2018 low of $100.48 on Dec. 26 and is up 13.4% since then. United Technologies stock is reasonably priced with a P/E ratio of 15.67 and a dividend yield of 2.58% according to Macrotrends.
United Technologies reports quarterly results before the opening bell on Wednesday, Jan. 23, and analysts expect the industrial conglomerate to disclose earnings per share of $1.50 to $1.55. The company has a winning streak of seven consecutive earnings beats and should benefit from resurgent military spending, a recovery in business jets and potential infrastructure spending. There is also potential repatriation of large overseas cash balances.
The daily chart for United Technologies
United Technologies stock has been below a “death cross” since Dec. 10, when the 50-day simple moving average fell below the 200-day simple moving average, indicating that lower prices would follow. This tracked the stock to its Dec. 26 low of $100.48. The 50-day and 200-day simple moving averages are resistance levels at $117.67 and $126.37, respectively. The closes on Dec. 31 resulted in the key levels that are shown as the horizontal lines on the chart. The stock is above my semiannual pivot of $108.74. My annual and quarterly risky levels are $127.97 and $130.73, respectively.
The weekly chart for United Technologies
The weekly chart for United Technologies will be positive if the stock ends this week above its five-week modified moving average of $114.58. The stock is above its 200-week simple moving average, or “reversion to the mean,” at $113.12. The 12 x 3 x 3 weekly slow stochastic reading ended last week at 20.30, up from 15.11 on Jan. 11 and moving above the oversold threshold of 20.00.
Given these charts and analysis, my trading strategy is to buy United Technologies shares on weakness to my semiannual pivot at $108.74 and to reduce holdings on strength to my monthly, annual and quarterly risky levels at $127.87, $127.97 and $130.73, respectively.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.