#SherwinWilliams #Stock #Price #Levels #Watch #News #Inclusion #Dow
Key takeaways
- Shares of paint maker Sherwin-Williams are likely to remain in focus after jumping in extended trading on Friday following news of its inclusion in the Dow Jones Industrial Average.
- The stock broke above the cup and handle pattern in mid-August, but has recently pulled back toward the initial breakout point, which could lead to a retest of the pattern’s upper trend line.
- Investors should keep an eye on key support levels on the Sherwin-Williams chart around $348 and $283, with an upside price target at $503 as well.
Shares in paint maker Sherwin-Williams (SHW) are likely to remain in focus after jumping in extended trading on Friday following news of the company’s inclusion in the Dow Jones Industrial Average.
Sherwin-Williams will replace chemical giant Dow (DOW) in the price-weighted index, which tracks 30 large companies. S&P Dow Jones Indices also announced that AI investor favorite Nvidia (NVDA) will replace struggling chipmaker Intel (INTC), with the changes taking effect before the start of trading on Friday.
Shares of Sherwin-Williams are up about 15% year-to-date through Friday’s close, outpacing the Dow Jones Industrial Average’s roughly 12% return over the same period. Although the company beat earnings estimates last quarter, it has topped Wall Street expectations for the majority of the past 20 quarters, according to FactSet data, illustrating the paint maker’s long-term profitability.
The stock rose 3.4% to $370 in after-hours trading on Friday.
Below, we review the technical details on the Sherwin-Williams weekly chart and identify important price levels that investors may be watching.
Possible retest of the cup and handle pattern
Since peaking in late 2021, Sherwin-Williams shares have formed a cup and handle book, a bullish chart pattern that resembles a cup with a handle and indicates a continuation of the stock’s long-term uptrend.
In fact, shares broke above the formation in mid-August, but have recently pulled back toward the initial breakout point, which could lead to a retest of the pattern’s upper trend line.
Let’s use technical analysis to identify two important support levels on a Sherwin-Williams chart and predict a target price for the measured movement.
Key support levels to watch
The first support level is near $348, where shares may face buying interest near the upper cup-and-handle trendline, which may have flipped from an area of previous resistance to future support.
Failure of the bulls to defend this important technical level could see the stock return to lower support at $283, which currently sits just above the closely watched 200-week moving average.
Investors may look for entry points near the trend line in this area that connects a group of similar price action on the chart between May 2021 and June of this year.
Measured movement price target
To forecast an upside price target, we can use the measured movement technique, also known by chart watchers as the scaling principle.
This works by calculating the depth of the cup portion of the pattern and adding that amount to the upper trend line of the formation. For example, we add $155 to $348, which predicts a measured moving target of $503, an area where investors can take profits, especially given its proximity to a psychologically round number.
Comments, opinions and analyzes contained in Investopedia are for informational purposes only. Read the warranty and disclaimer for more information.
As of the date of writing this article, the author does not own any of the securities mentioned above.
#SherwinWilliams #Stock #Price #Levels #Watch #News #Inclusion #Dow
