Conclusion, Investment Implications, Strategy
Textron Inc. (TXT) appears to be resuming its November 2020 major uptrend amid quarterly relative performance versus the benchmark S&P 500 (SPX). A sustained rise above the $48.84 area would help confirm this and target an additional 15% rise to $59.00 per share. This is an Asbury Momentum trade idea.
Analysis and Rationale
Textron Inc.(TXT) operates in the aircraft, defense, industrial, and finance businesses worldwide. The company’s Textron Aviation segment manufactures, sells, and services business jets, turboprop and piston engine aircraft, and military trainer and defense aircraft; and commercial parts, as well as offers maintenance, inspection, and repair services. Its Bell segment supplies military and commercial helicopters, tiltrotor aircraft, and related spare parts and services. Textron Inc. was founded in 1923 and is headquartered in Providence, Rhode Island.
The upper panel of Chart 1 below plots TXT daily since October 2020 along with its 200- and 50-day moving averages, widely-watched major and minor trend proxies. The lower panel displays a corresponding daily relative performance chart of TXT versus the benchmark S&P 500 (SPX, blue) along with its 63-day moving average (green, quarterly, our Strategic time period).
The rightmost green highlights in the upper panel show that TXT appears to be resuming its November 2020 major uptrend, as defined by its 200-day MA, following successful tests of the 50-day MA on Feb 2nd and 18th. Meanwhile, TXT’s current trend of quarterly relative outperformance versus SPX as shown in the lower panel also appears to be resuming following consecutive tests of it on those same dates. A sustained rise above the 50-day MA, currently situated at $48.84, would help to confirm this and would target an additional 15% rise to $59.00 per share.
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $49.00 area, a long entry price of $51.45 would provide a 1:3.1 risk/reward ratio (risking $1.00 to make $3.10) with an initial risk of 4.8%.
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