Short Trade Idea
Enter your short position between $236.34 (the lower band of its horizontal resistance zone) and $245.63 (the upper band of its horizontal resistance zone).
Market Index Analysis
- Honeywell International (HON) is a member of the Dow Jones Industrial Average, NASDAQ 100, the S&P 100 Index, and the S&P 500 Index.
- All four indices trade in bearish chart patterns with above-average bearish trading volumes.
- The Bull Bear Power Indicator of the S&P 500 Index is bearish with a descending trendline.
Market Sentiment Analysis
Equity futures are moderately higher this morning following yesterday’s volatile session. The impact of AI on businesses and their competitiveness continues to pressure company shares across sectors, especially amid lofty valuations. A severe disconnect exists in software companies, where their outlooks are muted, revenue growth is slowing, but most analysts increase their expectations. Minutes from January’s FOMC meeting are in the deck, while earnings from DoorDash, eBay, and Analog Devices will provide further insights into consumer spending and technology. Volatility could persist through Friday, when markets will receive January’s PCE and consumer confidence data.
Honeywell International Fundamental Analysis
Honeywell International is a conglomerate with aerospace, building automation, industrial automation, and energy and sustainability solutions (ESS) at its core. Additionally, it operates Sandia National Laboratories and has a global workforce of over 100,000 employees.
So, why am I bearish on HON despite its 30%+ rally?
I turned medium-term bearish on Honeywell after it reached my profit target, while its industrial automation segment underperformed amid soft demand in Europe and China, as evidenced by its latest earnings release, which missed revenue expectations. Operational and execution risks are rising amid the split into three entities, and competition from Siemens, 3M, GE Aerospace, and Schneider Electric has intensified. R&D expenses are also rising, and its Energy and Sustainability Solutions (ESS) faces massive headwinds.
Metric | Value | Verdict |
P/E Ratio | 32.05 | Bearish |
P/B Ratio | 9.93 | Bearish |
PEG Ratio | 2.21 | Bullish |
Current Ratio | 1.32 | Bearish |
ROIC-WACC Ratio | Positive | Bullish |
The price-to-earning (P/E) ratio of 32.05 makes HON an expensive stock. By comparison, the P/E ratio for the S&P 500 is 29.41.
The average analyst price target for HON is $244.40. This suggests no upside potential, while downside risks have increased.
Honeywell International Technical Analysis
Today’s HON Signal
- The HON D1 chart shows price action confirming a new horizontal resistance zone.
- It also shows price action between its ascending 0.0% and 38.2% Fibonacci Retracement Fan levels.
- The Bull Bear Power Indicator is bullish with a negative divergence.
- The average bearish trading volumes are higher than the average bullish trading volumes.
- HON rallied as the S&P 500 Index broke down, a bullish signal, but breakdown catalysts are accumulating.
My HON Short Stock Trade
- HON Entry Level: Between $236.34 and $245.63
- HON Take Profit: Between $205.22 and $210.98
- HON Stop Loss: Between $249.29 and $256.77
- Risk/Reward Ratio: 2.40
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