Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Chart Of The Day: Raytheon Stock Escalates On Ukraine War, Falling Flag Breakout

Published 02/28/2022, 10:34 PM
Updated 09/02/2020, 02:05 PM

Reports of a Russian troop buildup on the border of Ukraine—the largest mobilization since Moscow's 2014 takeover of Crimea—began hitting the news in late March 2021. Savvy investors have been bidding up defense contractors ever since.

After last week's Russian invasion of Ukraine finally began, it's likely we'll see aerospace and defense sector shares, such as Raytheon Technologies (NYSE:RTX) jump to new highs, riding an upleg that began in April 2021.

However, there are a number of company-specific fundamentals that could weigh on the Waltham, Massachusetts-based industrial firm, including its claim to being a target of the DOJ regarding hiring practices in the aerospace industry. As of Feb. 21, 2022, China placed sanctions on Raytheon and competitor Lockheed Martin (NYSE:LMT), over arms sales to Taiwan.

Still, the recent escalation of hostilities toward Ukraine by Russia has boosted defense contractor shares, including Raytheon stock.

RTX Daily

On Friday, the stock jumped more than 4%. It's up an additional 6% at the time of writing in Monday's pre-market trade. The move was the upside breakout of a falling flag, bullish after a rally that lasted for eight out of nine days.

The flag slumps as bulls cash out, allowing new bulls who missed the first leg higher to come in and carry the next move even higher. The upside breakout also penetrated the top of a rising channel, increasing the odds of a steeper rally to come.

Trading Strategies

Conservative traders should wait for the price to perform a return move, retesting at least the flag, which would coincide with the bottom of the green channel, if not the bottom of the earlier yellow channel.

Moderate traders would wait for a dip for a better entry if not for further confirmation.

Aggressive traders could enter a contrarian short, with a close stop-loss, to take advantage of a return move after a sharp spike before joining the rest of the market with a long position. Money management is critical. Here is an example of a basic trade plan:

Trade Sample – Aggressive, Contrarian Short Position:

  • Entry: $103.50
  • Stop-Loss: $104.50
  • Risk: $1
  • Target: $98.50
  • Reward: $5
  • Risk-Reward Ratio: 1:5

Author's Note: First, the trade sample above is not the full analysis. That's in the body of the text. Second, a sample simply provides one way of handling the trade, which could have many other approaches. We're merely trying to illustrate how to write a basic technical trading plan. Ultimately, we're not in the fortune-telling business. Rather we're simply arriving at an opinion based on our subjective interpretation of the supply and demand dynamics of technical analysis.

A trader's objective is not to win on an individual trade but to do well overall via statistics. Before you start trading imagine you've lost the funds you intended to trade. If you can't handle that, do not trade. The successful trader needs to learn to write a plan that incorporates their timing, budget, and temperament. Until you're able to do that, use our trades for practice, but not with the expectation of profit, otherwise you'll end up with neither...and there's no money back. Guaranteed.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.