Tickers in this Article: CAT, UTX, DOW, MMM
Conglomerate stocks were among the top performers over the last week, with the sector racking up a 3.4% gain according to Finviz.com. Conglomerates engage in two or more businesses but operate under one parent company. With strong performances over the last week, and the stock market popping higher - the S&P 500 SPDR (ARCA:SPY) is up 3.87% in September - where are these stocks likely to go next?

Caterpillar Inc. (NYSE:CAT) started out the year rising, but has fallen since putting in a 52-week high at $116.95 in February. Since July though the price has been edging higher, in what could be the start of an uptrend. The trendline drawn from the July lows to the September low of $81.78 is the support line of the stock. Holding above that line keeps the rally alive, but a drop below it, especially if the price falls below $81.78, is bearish for the stock. On the long-term chart going back to 2009, if the uptrend persists there isn't much resistance overhead until $100, followed by $110.

SEE: Technical Analysis: Support And Resistance



United Technologies (NYSE:UTX) has been trading within a large triangle formation going back to mid-2011. The top of the triangle, or resistance, is currently intersecting at $85; a rise above that price indicates another wave higher with a price target of approximately $105. Short-term support is at $77.49, right near the 200-day moving average, with a drop below signaling a likely decline toward the triangle support line at $72.25. Continuing to drop through the triangle support line is bearish, as the price target is near $52.50. Until that breakout occurs, trading is likely to be choppy and contained within a narrowing range between the narrowing trendlines.

SEE: Interpreting Support And Resistance Zones



The Dow Chemical Company (NYSE:DOW) has been moving predominately sideways, with a downward bias since peaking in April. The series of lows, which have occurred since May, show buying support near $28. A breach of $28 means selling is accelerating and there is little support until $24, followed by the 52-week low at $20.61. In order to kick-start a rally, the stock will need to climb above the September 14 high at $32.48 - this would create a higher swing high and the potential for an emerging uptrend. Resistance beyond is at $34.10 and the high of the year at $36.08.



The company 3M Co. (NYSE:MMM) has been creeping higher throughout much of the year, and is hovering near the high price of (and short-term resistance) $94.30 set on August 17 (unadjusted for dividends). If the stock moves above that mark, the uptrend will likely continue pushing the price toward the 2011 high of $98.19, and potentially beyond. A drop below $90 on the other hand, has short-term bearish implications likely resulting in selling toward support at $85, and potentially followed by $82.50.

SEE: The Anatomy Of Trading Breakouts



The Bottom Line
Each of these conglomerate stocks has their own story. Three of these stocks have been fairly weak over all in recent months, and have not confirmed the move higher in the stock market. That could all change if a couple of resistance levels are broken and the stocks initiate or maintain uptrends. If support levels are broken, or weakness in these stocks develops or continues, it signals further weakness and could be a sign that the broader market may be nearing a top.

Charts courtesy of stockcharts.com

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

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