Chart of the Day: Eventually Eaton Should Gobble Through the Resistance
The stock is coiling nicely, storing energy for what might be a very powerful move.
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Eaton ETN has established yet another range this month, after going sideways in mid-summer. But the new range is lower than the previous one, telling us significant resistance is overhead.
Simply put, sellers lurk at higher prices, and when Eaton starts making a move upward, those sellers will start to unload the stock. It is only when that function is completed that Eaton's stock will start to rise past those levels.
We'll call the range $310-325 for now; the old highs are just a bit more than that range.
The positives we can note are the indicators and the turnover. Volume levels have been rather quiet over the past few weeks. The moving average convergence divergence indicator, as seen in the second pane, remains on a buy signal. The same goes for the parabolic stop and reverse, as you can see in the dots in the top pane.
At the same time, money flow is improved, as seen in the bottom pane, while stochastics -- seen in the fourth pane -- remain buoyant.
The current price is just below the 100-day-moving average, a spot where Eaton has had some trouble recently. But a move above there (call it $308) could get this name moving higher quickly.
We rate Eaton a "Two" in TheStreet Pro Portfolio, stockpile on pullbacks.
The Pro Portfolio is long Eaton.
