Honeywell Looks Destined for Even Higher Prices, Charts Show

With the E-Mini S&P 500 futures (Es) putting in a mere 7.25 points of intraday travel during Friday's regular session, I couldn't spin the day's auction as exciting if I wanted to.

Traders willing to roll the dice on additional upside during the coming week should continue to monitor the contract's closing price (and value migration) against a short-term exponential moving average (I favor either the eight-day or 10-day EMA). As long as the contract continues to close above the short-term EMAs, I favor buying dips over selling rips.

Moving on to Monday's regular session auction, we'll begin once again with an initial focus on 2113.75 - 2114.75. As long as value remains above that general area, I'd expect day timeframe traders to give buyers every benefit of the doubt. Upside value migration (beyond 2119.75) is expected to be our next catalyst to push us into a more imbalanced, and trending, state.

S&P 500 Futures -- Five-Min Volume

Source: eSignal

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Failure to hold the line near 2113.75 doesn't return a short-term advantage to sellers, but it does open the door to price volatility toward 2108. While scalpers would be expected to lean short beneath 2113.75, dip buyers looking beyond the next 30 minutes would be expected to lurk on the bid side of the market in and around 2108. Only a meaningful slide in value beneath 2108 begins to reverse last Thursday's bullish breakout.

Additional Notes:

1. One of the better-looking breakouts I saw last week occurred in Honeywell International (HON). The stock, which happens to be a holding in the Action Alerts Plus portfolio, surged to new all-time highs late last week on relatively strong volume and appears destined for still higher prices. The fundamental side of HON (which is strong) is covered actively by Jim Cramer and Jack Mohr. As far as the technicals are concerned, I believe higher timeframe swing traders can look to enter HON against $100.

Put another way, regardless of whether you opt to chase last week's strength or stalk the stock on a dip, the currently bullish trend looks fine as long as the stock continues to close (on a weekly basis) above $100.

If you're operating on a shorter timeframe and want to keep risk tighter, consider trading and basing your risk against the now rising eight-day or 10-day exponential moving average.

2. Late last year Kimberly-Clark (KMB) decided to spin off its healthcare division into a separate company. This new entity, Halyard Health (HYH), began trading publicly on Nov. 3, 2014. The stock performed well during its first eight to 10 weeks of trading, but after that, buyers lost interest and demand fell pretty flat. Declining demand eventually gave way to more sustained selling beginning in late-April 2015. And said weakness has only intensified during the first two weeks of May 2015. With the caveat that sellers are unquestionably in control of HYH during the short and intermediate term, I am interested in seeing if the stock can stabilize and put in a bottom between approximately $42 and $40. And as an added benefit, HYH also happens to be favored by the AA+ team.

Halyard Heath (HYH) -- Daily

Source: eSignal

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As you can see on the chart above, HYH broke out to new IPO highs late-December 2014. From a trading perspective, I am interested in stalking price volatility toward that breakout zone ($39.75-$40.70). And assuming the stock can continue to close weekly bars above $39-$40, I believe this is a decent stock for dip buyers to keep an eye on.

Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my twitter feed @ByrneRWS.

At the time of publication, Bob Byrne had no positions in any of the securities mentioned.