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UPS shares satisfy all four criteria in our technical analysis of S&P 100 stocks. (JIM YOUNG/REUTERS)
UPS shares satisfy all four criteria in our technical analysis of S&P 100 stocks. (JIM YOUNG/REUTERS)

NUMBER CRUNCHER

UPS stock delivers in technical analysis of U.S. industrials Add to ...

What are we looking at?

U.S. industrial stocks based on four technical indicators.

 

The screen

 

We limited our pool to the S&P 100 index. This subset of the S&P 500 comprises 100 major, blue-chip companies across multiple industry groups. We examined each stock’s moving average, which is the average closing price over a recent period, usually the past 10 weeks (10wMA) and the past 40 weeks (40wMA).

Looking at the moving average week by week gives us a sense of investor’s behaviour: Are they growing more (or less) enthusiastic about the company’s outlook and are they more (or less) likely to purchase the stock?

We started by selecting only those that are above (or at least not below) both their 40wMAs and 10wMAs. We then narrowed our search by choosing only the ones with positive stochastic and on-balance volume (OBV) indicators.

The stochastic indicator measures investors’ activity. It looks at today’s range (defined as today’s high minus today’s low) and compares it with the average range of the previous five days.

A positive signal is generated whenever today’s range is higher than the previous five days’ average. This suggests that buyers are willing to pay more for the stock than they did during the past five days and shows a positive trend.

On-balance volume (OBV) is used to detect momentum. Volume should keep pace with price; each $1 rise in price should be accompanied by a commensurate rise in volume. A rise in price on lesser volume would suggest a negative signal for the stock.

 

What did we find?

 

We found two stocks (Emerson Electric and United Parcel Service) that satisfy all four criteria, suggesting that these are the only favourable industrial stocks on the S&P 100 index at this time.

The other stocks in the table need either a narrow trading range or a minor correction to become attractive. The adjoining table summarizes our findings.

U.S. industrials

CompanySymbolPrice $
(April 29)
40wMA10wMAStochasticOBV
Emerson Electric Co.EMR-N68.05RisingRisingPositivePositive
United Parcel ServiceUPS-N98.01RisingRisingPositivePositive
Caterpillar Inc.CAT-N105.30RisingRisingNeutralNeutral
Union Pacific Corp.UNP-N189.89RisingRisingNeutralNeutral
3M Co.MMM-N137.55RisingRisingNegativePositive
General Electric Co.GE-N26.76RisingRisingNegativePositive
United Technologies Corp.UTX-N117.56RisingRisingNegativePositive
General Dynamics Corp.GD-N108.26RisingRisingNegativeNeutral
Lockheed Martin Corp.LMT-N161.99RisingRisingNegativeNeutral
Norfolk Southern Corp.NSC-N94.17RisingRisingNegativeNeutral
Raytheon Co.RTN-N95.90RisingRisingNegativeNegative
FedEx Corp.FDX-N135.47RisingFlatNeutralNeutral
Boeing Co.BA-N128.37RisingFlatNegativeNeutral
Honeywell Int'l Inc.HON-N92.47RisingFlatNegativeNeutral

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