With both
Raytheon Co
(
RTN
) and
Lockheed Martin
(
LMT
) both recently at significant long-term highs (new, 52-week highs
for LMT and new, 6-month highs for RTN), it is no surprise that
both stocks have been experiencing profit-taking over the past few
days.
Shares of both RTN and LMT have been pulling back over the past
four days, with Lockheed Martin finishing just outside of
technically oversold territory and Raytheon closing near breakeven
levels on Wednesday. And with Raytheon and Lockheed Martin both
scheduled to report quarterly earnings on Thursday, the question
for traders and active investors alike is whether or not these
stocks have further to fall.
If recent price action in
Boeing
(
BA
) is any indication, then buyers may be more soon to arrive in this
market than traders may think. Boeing reported quarterly earnings
on Wednesday that bested analyst expectations and the stock, after
trading lower early in the day, rallied toward short-term highs to
end the session in positive territory.
Boeing had traded lower for three days in a row before
Wednesday's modest bounce. And like RTN and LMT, Boeing never
traded in technically
oversold
territory and did not make a significant new low before reversing
modestly higher. As with Raytheon, Boeing's pullback came in the
context of a rally to new, six-month highs a week ago, and the
stock only has been trading in bull market territory since early
December.
Real weakness in the sector is more likely to be found in
defense stocks like
Northrop Grumman Corp
(
NOC
). Shares of NOC have dropped for three days in a row and are
trading just outside of oversold territory above the 200-day moving
average. In fact, NOC only has been trading in
bull market territory
for the past two weeks. The stock has a short-term edge of just
under half a percent and a neutral rating of 6 out of 10.
Traders and active investors looking to avoid single-stock risk
may want to consider some of the exchange-traded funds that include
these aerospace/defense stocks among their holdings. Among the more
widely-traded are the
PowerShares Aerospace & Defense Portfolio ETF
(
PPA
) and the
iShares Dow Jones U.S. Aerospace & Defense Index Fund
ETF
(ITA).
Be sure to read our latest column from
7 Stocks You Need to Know
:
Marvell Makes Good: Nearly 9% in Less Than a
Week
.
David Penn
is Editor in Chief of TradingMarkets.com.