Chart of the Day: Pullback in Eaton Is Actually a Positive
A volatile name like Eaton ($ETN) is tough to hold but if you take a long term approach as we do with the Pro Portfolio then you can understand why we hold a name like this. Chris Versace has spent hours and hours reviewing the fundamentals of this company and the group, believing there are just too many opportunities in the future not to participate. Eaton has been building its market share slowly, and while the stock continues to hang around a fairly tight range, we recently saw a nice breakout occur that may be the precursor to future moves higher.
Following a sharp rise in earnings last month, Eaton followed through to the upside and tagged a new high on better turnover. That means big money was coming in, but in a snap the stock started to falter and so did money flows, see the bottom pane as the chaikin money flow indicator went negative. That is not an end to the overall trend, just a stall in the short term.
Notice how Eaton came down to the 100-day-moving average this week, typically a good place of support. Yes, the other indicators are bearish, but the price action is not horrible here. We’ll give this stock the benefit of the doubt. If the stock does lose this support there is much better price support at $358, a spot you may want to back up the truck.
We like Eaton in the Pro Portfolio and rate it a two, stockpile on pullbacks.
At the time of publication, the Pro Portfolio long ETN.
