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Charles Devalle says: “Just when you thought things were at their worst, now investors are worrying about the election. Obama wants to pull troops from Iraq, which would mean less defense spending. McCain isn’t in a hurry to pull troops out, which means a continuation of defense spending.”

Once upon a time, the defense sector was the place to have your money. From wars in Iraq and Afghanistan, the U.S. was spending tons. Is the party over? That’s what our reader Paul was wondering when he asked…

Subject: UTX United Aircraft?

Hi Charles, Shares are down perhaps because of building slump dropping HVAC and elevator backlog? This seems to be a well-managed company. Jet engines doing well (Pratt-Whitney) and more efficient ones will go into the newer lightweight composite fuel efficient jobs the survivors will have to be flying to be competitive. Whatcha think? Paul

The whole sector is being downgraded. It explains why United Technologies (UTX) is suffering. The scariest part… airlines should reduce their orders in the next two years as they cut costs to cope with higher oil prices.

Just when you thought things were at their worst, now investors are worrying about the election. Obama wants to pull troops from Iraq, which would mean less defense spending. McCain isn’t in a hurry to pull troops out, which means a continuation of defense spending.

That’s a huge uncertainty that won’t be fully resolved until after the election in November.

Technically, the company is a falling knife. Well, that is unless you look at their weekly chart. They are sitting just above their 200-week moving average. While this may look tempting as a buy, when you look back, you’ll notice the last time they hit their 200-week average, they still fell under it.

In other words, there’s no real pattern of their 200-week acting as support. The last thing you should do is buy because your hoping a pattern emerges.

While I believe the sell-off in this company is overdone (and we may see a bounce), this stock probably won’t perform until after the November election.

Let United Technologies (UTX) slide.

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About the Author

Charles Delvalle is a self-taught market-timing professional and value analyst who uses a combination of technical indicators and fundamental research to achieve consistent gains on stocks, commodities and options. Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering great companies on the cheap. He questions government reports and the status quo. In addition to swing trading options, Charles is also Co-Editor of the monthly advisory service - INCOME.

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