Stock of the day: Honeywell

We’re back with the stock of the day analysis, and our first one this year is on
Honeywell – a company listed on the NYSE. It’s not the first time we analyse this
instrument. We wrote a piece about Honeywell at the end of November last year,
when the price was around 212 USD. Back then, we were bearish because the price
was breaking the neckline of the Head and Shoulders pattern, which is normally a
clear signal to go short.

It worked out pretty well. The price indeed went down, below the psychological
mark of 200 USD. Then, the price reversed a bit. The rise shouldn’t have been a
surprise because after the breakout of the neckline (red), the price very often
comes back to test this line as a resistance. And that is what’s happening right now.

So far, it looks like sellers are winning this one too. The price is testing the neckline
in a bearish manner, so we have a rise and then a quick drop, which leaves a long
upper shadow on the daily candle. That usually means a rejection and at the same
time – a confirmation of the sell signal.

Negative sentiment stays here, as long as the price stays below the neckline.
Chances for a comeback above that are now rather limited