RTN Raytheon Weekly Chart Defense Sector Rising Wedge Ovebot Negative Divergence

RTN was highlighted as a short candidate on the Positions and Picks page on this site for a few weeks and she ended up receiving the negative divergence spank down and the collapse out of the rising wedge. The drop so far is from 59 to 52, over 10%, so the initial move lower is already history.  The indicators remain weak and bleak so lower prices would be expected. The bounce is a dead cat bounce since none of the indicators want to see a bounce, they all want lower numbers. The gap at 50 and support at 48 are two attractive support levels. This chart was also selected this morning since the collapse out of the rising wedge is very illustrative of what to typically expect from a rising wedge pattern (look back at the SPX charts this weekend to note their rising wedges).

The defense sector is hit hard as the sequestration approaches, a major part of the budget cuts would be in the defense sector. States like Virginia, North Carolina and so forth, will receive pain with tens of thousands of layoffs on tap. Other defense companies are hit as well like GD, LMT, NOC and LLL.   Interestingly, if prices can drop more, RTN may line up for a potential long trade for the last few days of this month, as the sequestration drama builds to a head. If the politicians kick the can and avoid defense cuts, RTN will catapult higher. Thus, the defense sector is worth watching but right now, it is only watching that should be done. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.