Honeywell Is Likely to Struggle in the Months Ahead

In his first "Executive Decision" segment of Mad Money Monday evening, Jim Cramer spoke with Darius Adamczyk, chairman and CEO of industrial giant Honeywell International (HON) .

Adamczyk said Honeywell has played a vital role in every phase of the Covid-19 pandemic, from providing N-95 masks and creating healthy building and aircraft products, to inventing a new container that can replace glass vials for vaccines.

Beyond Covid-19, Adamczyk said Honeywell continues its transformation from a hardware company to a software one. He said at their core, Honeywell is a controls company and it controls buildings, aircraft, machinery and more.

Adamczyk was also bullish on Honeywell's materials business, which is working on economically viable energy storage systems and sustainable plastic renewable products.

Let's check and see what the charts and indicators look like today.

In this daily bar chart of HON, below, we can see that the price of HON plunged in February and March like many stocks. Prices recovered from late March but corrected to the downside in May. Most of June has seen the price of HON correct again and now test the rising 50-day moving average line. The rally in early June stopped around the intersection of the declining 200-day moving average line.

Trading volume was heavy during March as traders and investors liquidated positions and the On-Balance-Volume (OBV) line plunged. The OBV line has declined with prices in May and June and tells us that sellers of HON can quickly shift back to being aggressive.

The Moving Average Convergence Divergence (MACD) oscillator peaked with prices in early June and is now close to crossing below the zero line for an outright sell signal.

In this weekly bar chart of HON, below, we can see a weak picture. The rebound in prices from late March stopped at the intersection of the declining 40-week moving average line.

The weekly OBV line shows a decline from November telling us that selling has been going on for several months and not just in February and March.

The MACD oscillator finally gave a cover shorts buy signal in late May and it is a long way from the zero line.

In this daily Point and Figure chart of HON, below, we can see that the software is projecting a potential downside price target in the $116 area.

Bottom line strategy: While the fundamental story on HON may sound promising, the charts and indicators (above) tell me a different story. HON could retest its May low in the weeks and months ahead. Avoid the long side for now.

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