Dow Stock Reacts to China Buzz

China approved UTX's $23 billion buyout of COL

Nov 23, 2018 at 9:55 AM
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The shares of United Technologies Corporation (NYSE:UTX) are up 2.4% at $128.73, after China approved the blue-chip defense firm's record $23 billion buyout of aircraft parts manufacturer Rockwell Collins (COL). The deal, which was first announced in September 2017, received the green light from U.S. and European regulators earlier this year and is expected to close next week.

Looking closer at the charts, UTX stock has been more volatile than usual in recent months, per its 60-day historical volatility of 23.4% -- in the 79th annual percentile. This time frame includes the security's more than 17% plunge from its Sept. 21 record high of $143.92 to its Oct. 29 low near $119, with the shares now testing a 23.6% Fibonacci retracement of this decline, as well as their 320-day moving average.

Despite these technical struggles, sentiment is generally upbeat toward United Technologies. Checking out the brokerage bunch, nine of those in coverage maintain a "buy" or better rating, compared to two "holds," and zero "sells." Plus, the average 12-month price target of $150 is a roughly 20% premium to current trading levels.

Elsewhere, short sellers have been abandoning their bearish positions, with short interest down 17.8% in the two most recent reporting periods. The 15.24 million UTX shares still sold short is the lowest since mid-July, and accounts for just 1.9% of the stock's available float.

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