Toolmakers Have High Basing Patterns
Attention is shifting toward industrials as technology and the Nasdaq struggle. Two companies in the space have potentially bullish patterns: Illinois Tool Works and 
Stanley Black & Decker.
ITW is the larger company with a market cap of about $68 billion. It broke out to new all-time highs in August and consolidated for the next seven months. Now the bulls may be ready to return.
First notice the high basing pattern above old resistance. It first held $190 on October 2, turning the pre-Covid peak into a new bottom. It made a slightly higher low four weeks later. ITW revisited this zone in late January, once again making a slightly higher low.
Meanwhile, a downward-sloping trend line took shape – only to be broken at the beginning of March.
Also notice how the 50- and 100-day simple moving averages flattened out and squeezed on either side of the price.
SWK shows similar patterns. It made new highs above $176 in October and spent about six months chopping on either side of that level. Like ITW, it had a descending trend line breakout and a tight squeeze between the 50- and 100-day SMAs.
The fundamental stories for these companies also appear favorable, given the improving economy and prospect of increased infrastructure spending. SWK may appeal to value investors, trading for less than 20 times forward earnings.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Stanley Black & Decker.ITW is the larger company with a market cap of about $68 billion. It broke out to new all-time highs in August and consolidated for the next seven months. Now the bulls may be ready to return.
First notice the high basing pattern above old resistance. It first held $190 on October 2, turning the pre-Covid peak into a new bottom. It made a slightly higher low four weeks later. ITW revisited this zone in late January, once again making a slightly higher low.
Meanwhile, a downward-sloping trend line took shape – only to be broken at the beginning of March.
Also notice how the 50- and 100-day simple moving averages flattened out and squeezed on either side of the price.
SWK shows similar patterns. It made new highs above $176 in October and spent about six months chopping on either side of that level. Like ITW, it had a descending trend line breakout and a tight squeeze between the 50- and 100-day SMAs.
The fundamental stories for these companies also appear favorable, given the improving economy and prospect of increased infrastructure spending. SWK may appeal to value investors, trading for less than 20 times forward earnings.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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