Trade of the Day: United Technologies (UTX)

by John Jagerson and Wade Hansen | January 6, 2014 9:44 am

Trade of the Day: United Technologies (UTX)

We’ve opened a new bullish call options trade on United Technologies (UTX[1]). UTX is breaking out of a consolidation range that has been taking shape for the past three months. Any time a stock consolidates for that long and then breaks out, it has the potential to sustain a strong bullish move. Looking at the height of the pullback the stock made from $112.50 to $102.50, we think UTX could easily climb toward $120 after breaking above resistance near $110.

UTX is in a great position to take advantage of the market-wide bullishness we continue to see. The latest budget deal the U.S. Congress reached added $22 billion in spending back to the military budget, and a good portion of that is going to flow into UTX’s coffers as the Department of Defense gets ready to spend $724 million on helicopters from UTX subsidiary Sikorsky Aircraft and millions more on Lockheed Martin’s (LMT[2]) F-35 fighter jet contract — in which UTX’s Pratt and Whitney provides the engines.

We also expect that general economic growth will continue to boost revenues in UTX’s Otis and UTC Climate, Controls and Security segments as global construction and reinvestment starts to pick back up.

UTX will be releasing its quarterly earnings on Jan. 22, before the market opens, but we expect a few positive updates and analyst upgrades before that time, which should push the stock up higher. Take advantage of this with call options in UTX:

‘Buy to open’ the UTX February 115 Calls  for a maximum price of $1.65.

InvestorPlace advisors John Jagerson and S. Wade Hansen are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader[3], a trading service designed to help you make options profits by trading the news.  Get in on the next trade and get 1 free month today by clicking here[4].

Follow John Jagerson[5] and Wade Hansen[6] at Google+!

Endnotes:
  1. UTX: http://slingshot-trader.investorplace.com/getaquote/?STOCK_VAR=@UTX%20%20%20140222C00115000
  2. LMT: http://studio-5.financialcontent.com/investplace/quote?Symbol=LMT
  3. SlingShot Trader: http://slingshot-trader.investorplace.com/index.html
  4. by clicking here: https://order.investorplace.com/?sid=QP7117
  5. John Jagerson: https://plus.google.com/115711248746858558308?rel=author
  6. Wade Hansen: https://plus.google.com/108450692850544646698?rel=author

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