Is Raytheon Company (RTN) Nearing a Turning Point?

Investors and paying cloes attention to shares of Raytheon Company (RTN) as the Relative Momentum Indicator or RMI has been spotted trending higher over the past week.  As momentum builds for the shares, we will watch to see if the price moves into overbought territory.  

The Relative Momentum Index was introduced by Roger Altman, was publishing in 1993 in the Technical Analysis of Stocks & Commodities magazine.  The RMI aims to iimprove upon the widely used Relative Strength Indicator, identifying when shares reach oversold or overbought range.  The difference is in the “look back” period.  The standard RSI compares the current close with the close 1 day ago. The RMI allows you to vary the number of days used to look back.

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When applying indicators for technical analysis, traders and investors might want to look at the ATR or Average True Range. The current 14-day ATR for Raytheon Company (RTN) is currently sitting at 4.42. The ATR basically measures the volatility of a stock on a day-to-day basis. The average true range is typically based on 14 periods and may be calculated daily, weekly, monthly, or intraday. The ATR is not considered a directional indicator, but it may reflect the strength of a particular move.

Currently, the 14-day ADX for Raytheon Company (RTN) is sitting at 19.54. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend.

Checking in on some other technical levels, the 14-day RSI is currently at 69.72, the 7-day stands at 80.94, and the 3-day is sitting at 94.59. Many investors look to the Relative Strength Index (RSI) reading of a particular stock to help identify overbought/oversold conditions. The RSI was developed by J. Welles Wilder in the late 1970’s. Wilder laid out the foundation for future technical analysts to further investigate the RSI and its relationship to underlying price movements. Since its inception, RSI has remained very popular with traders and investors. Other technical analysts have built upon the work of Wilder. The 14-day RSI is still a widely popular choice among technical stock analysts.

Investors may be watching other technical indicators such as the Williams Percent Range or Williams %R. The Williams %R is a momentum indicator that helps measure oversold and overbought levels. This indicator compares the closing price of a stock in relation to the highs and lows over a certain time period. A common look back period is 14 days. Raytheon Company (RTN)’s Williams %R presently stands at -13.56. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would indicate an overbought situation. A reading from -80 to -100 would indicate an oversold situation.

Taking a closer look from a technical standpoint, Raytheon Company (RTN) presently has a 14-day Commodity Channel Index (CCI) of 154.45. Typically, the CCI oscillates above and below a zero line. Normal oscillations tend to stay in the range of -100 to +100. A CCI reading of +100 may represent overbought conditions, while readings near -100 may indicate oversold territory. Although the CCI indicator was developed for commodities, it has become a popular tool for equity evaluation as well.

Investors may be looking at all the different factors that come into play when searching for those next stocks to add to the portfolio. Maybe there are some names that have been on the radar, but the timing hasn’t been right to add them into the mix. As we get closer to the end of the year, investors may be looking back at individual stock performance over the past year. They may discover some great opportunities that weren’t available during the last review. Investors may also be keeping an eye on which sectors were the big winners during the latest earnings season. Branching out into new areas may help give the investor some alternative ideas for the next few quarters.

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