Auto Parts Stock Gearing Up for New Highs

by Sam Collins | May 20, 2013 1:34 am

Johnson Controls (NYSE:JCI[1]) — This auto parts company supplies building controls and energy management systems, automotive seating and batteries. On March 12, the Trade of the Day[2] said, “Global vehicle sales projections indicate a 3.4% rise in overall revenues in fiscal year (FY) 2013, ending in September, and adjusted earnings are expected to increase from $2.59 in FY 2012 to $2.67 in FY 2013.”

The stock rose recently on reports that it is exploring the sale of its automotive electronics unit, and last month, the company met analysts’ fiscal Q2 earnings estimates of $0.42 a share. In the past week, management reaffirmed its previous earnings guidance for FY 2013 of $2.60 to $2.70, expecting better performance in the second half of the year.

Technically, JCI is in a bull market following a golden cross in January and a breakout from a trading rectangle in March. From March to late April, a new rectangle was formed from $32 to $35, and it broke from that formation on May 6. Breaks from trading rectangles are bullish “step-ups” and often accompany charts that will continue to make new highs. Our trading objective for JCI is raised from $42 to $45.

JCI Chart
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Trade of the Day Chart Key[3]

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