Northrop Grumman Corporation (NYSE:NOC) $NOC #Stocks #Aerospace #Defense Buy on Dips
Wins Air Force Deal to Upgrade F-16 Program
Northrop Grumman
Ticker: NYSE:NOC
Price: $301.75
Recommendation: Strong Buy
Sector Outlook
Global Defense spending has been on a serious upswing over the recent years spurred by the return of the great power competition amongst the leading world powers. The main focus has been on equipment modernization, capabilities revitalization and increased R&D outlays towards development of next generation & game changer technologies with the traditional as well as the revisionist powers looking for a possible overmatch & that much vaunted military edge. The United States continues to maintain the traditional top spot driven by the nation’s significant focus & investments towards R&D while the Chinese ascension & the Russian resurgence, too, are being funded adequately.
Global Defense spending, standing at just over 2% of the worldwide GDP for 2019, has been growing at a scorching pace since the onset of this great power competition with the growth rate, pegged at 3.6% for 2019, virtually paralleling the cold war era highs. The Middle East, Eastern Europe & the Asia-Pacific regions remain as the traditional battlefields for dominance & influence amongst the great powers of the planet with political instability, ongoing conflicts & territorial disputes reigning supreme across these regions fuelling demand of military equipment by the regional powers & leading nations across these regions for both defense & offense purposes that has given huge propulsion to arms imports & initiation of indigenous, large scale defense programs over the recent years with the Asia-Pacific region bagging the top spot, a trend that is probably going to be sustained over medium term.
This return to the age of multipolarity, marked by the onset of great power competition at the world stage stymieing the forces of globalisation & marking the resurgence of the age of realism, has simultaneously been superimposed by the onset of the worldwide outbreak of the COVID-19 pandemic in early 2020, opening the second front and making the entire emerging scheme of things even more difficult. The economic impact of the pandemic & the funding of the relief efforts, underway across the world, are likely to place pressure on government finances across most parts of the world. However, their impact on defense spending is likely to be restricted to near term & non-strategic programs. Most strategic & long term, indigenous defense programs as well as technology development efforts are likely to be more or less immune in nature.
Business Summary
Northrop Grumman Corporation is a global security company.
The Company provides products, systems and solutions in autonomous systems; cyber; command, control, communications and computers, intelligence, surveillance and reconnaissance (C4ISR); strike, and logistics and modernization.
The Company’s segments include Aerospace Systems, Mission Systems and Technology Services.
The Company’s Aerospace Systems segment is engaged in the design, development, integration and production of manned aircraft, autonomous systems, spacecraft, high-energy laser systems, microelectronics and other systems/subsystems.
The Mission Systems segment offers mission solutions and multifunction systems for Department of Defense (DoD), intelligence community, international, federal civil and commercial customers.
The Technology Services segment provides logistics solutions supporting the full life cycle of platforms and systems for global defense and federal-civil customers.
Shayne Heffernan Trade Idea
“Our current price target of Northrop Grumman will come in around $393.18 giving the stock a price increase of +30.30%.”
Price Performance
Relative Valuation
Technical Indicators
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 330.48.
The projected upper bound is: 322.31.
The projected lower bound is: 279.49.
The projected closing price is: 300.90.
Candlesticks
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 14.7525. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 7 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 35.98. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 79 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -132.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 10 period(s) ago.
Rex Takasugi – TD Profile
NORTHROP GRUMMAN closed down -0.160 at 301.750. Volume was 37% below average (neutral) and Bollinger Bands were 0% narrower than normal.
Open High Low Close Volume 300.370 302.330 294.000 301.750 199,424
Technical Outlook Short Term: Oversold Intermediate Term: Bearish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 313.51 328.96 345.03 Volatility: 32 41 50 Volume: 265,661 255,715 291,407
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
Summary
NORTHROP GRUMMAN is currently 12.5% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future.
Our volume indicators reflect moderate flows of volume out of NOC.N (mildly bearish). Our trend forecasting oscillators are currently bearish on NOC.N and have had this outlook for the last 6 periods.
