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October 17 Chart of the Day - Lockheed Martin

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Lockheed Martin (LMT), a leading global security and aerospace company, reported third-quarter earnings that beat estimates on both the top and bottom lines, but the company's margins were “disappointing,” according to some analysts that follow the company.

Investors and traders seemed to shrug off those comments as the stock is trading up about $5 in early action today near $450.

But since making all time highs (ATH) of $508.10 back in April of this year price has retreated in a technically correct fashion when using price action technical analysis.

In fact, when looking at the monthly chart and using only support/resistance and trend we can see that nothing is technically broken and the long term up trend is alive and well.

What we are seeing is a typical cycle, which is about the only thing guaranteed on any chart is that price continuously cycles up and cycles down. Across all time frames.

Moving down to the weekly chart and adding additional price action tools such as Fibonacci and a Change Control Zone we can begin to answer the question of "where could price go?"

Careful not to ever say or think where will price go because nobody ever knows with any certainty what price will do in the future. Nobody...

Change control zones are one of the five price action tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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