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The shares of Honeywell (HON) have had a difficult start to the year. The security already carries a 6.6% year-to-date deficit, and has struggled to rally from its a Feb. 24, one-year low of $174.42. Plus, the 180-day moving average has been keeping a tight lid the equity, rejecting its latest rally earlier this month. If past is precedent, investors should continue to steer clear of Honeywell stock, as the security has just recently come within striking distance of a historically bearish trendline that has preceded sharp pullbacks.
Specifically, Honeywell stock is close to its 100-day moving average. According to a study from Schaeffer’s Senior Quantitative Analyst Rocky White, the security has come near this trendline five times in the past three years, seeing a negative one-month return after these signals 80% of the time, while averaging a 3.5% loss. From its current perch of $194.70, a similar move would place HON back below the $187 mark.
Additional headwinds could come from a change in sentiment in the options pits. This is per HON’s 10-day call/put volume ratio of 2.48 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 93% of readings from the past 12 months. In other words, calls have been getting picked up at a much quicker-than-usual clip.
Echoing this, the stock’s Schaeffer’s put/call open interest ratio (SOIR) of 0.66 sits higher than just 21% of annual readings. This means short-term options traders have rarely been more call-biased.