Market Backdrop
The market is holding a mixed picture. The Dow closed a little lower today, though it hit records yesterday. Yields are pushing up today, yet the market gives up little ground. Earnings are beating expectations by a wide margin, and that is fueling the move higher. Money keeps rotating into strong sectors, which builds a base under stocks and lets the market climb its "wall of worry." Three names ride that momentum: Honeywell, Bank of America, and RTX.
Honeywell (HON)
Honeywell is down about 2% today but up on the month. A big spin-off happened a couple of months ago; owners of the spun-off piece are unhappy right now. The main company, Honeywell International, should keep its upward momentum into the second half of the year. Its strong areas: industrial automation, energy, and sustainability.
Technicals: The stock trades near its highs around 252, where it formed a double top. Earlier highs sit near 248, and it has not managed a strong close above that except one day, a red candle that faded fast. The trend has sped up, shown by a steeper white trend line versus a shallower blue one. Today's price is slipping below that trend line, but the day is young and it could turn around. Relative lows near 237 (green line) mark a spot to watch for a breakdown. The 5-day EMA sits near 245, and price has broken below it, an early hint of trend change. The 21-day EMA (one month) comes in near 238.44. RSI is squeezing into a narrowing triangle, so a break past either edge gives the next directional clue. Volume is heaviest between 240 and 245, then picks up again near 234, a likely support zone if price falls there. Current price: 242.82, later 242.77.
The trade: A call fly to the upside to define risk while catching a breakout above 250, which would be a meaningful move. Buy a September 250/270/290 call fly: buy one 250 call, sell two 270 calls, buy one 290 call. Cost about $3.80 with the stock near 243. It ties up a little cash but caps risk and captures a breakout above 250 over the next month and a half.
Bank of America (BAC)
Bank of America is down about a third of a percent, just under unchanged, but positive on the year. Financials are the rotation trade and look set for more strength in the second half. The choice came down to JPMorgan versus Bank of America, both strong. Bank of America won the spot because it is cheaper, which makes it easier to build option strategies around.
Technicals: New highs just shy of 64, but a possible bearish engulfing candle formed, where a larger red candle fully swallows the prior day's smaller green candle body (open-to-close range). A confirming down day would follow. Since price sits a stone's throw from its highs, this may just be a normal pullback after a strong rally. Support levels: near 60.83 (an old intraday high) and near 59.20 (another old high). Price is still above the 5-day EMA at 62.73. Below that, the 21-day EMA is next, and if it breaks the small channel between two white lines, the monthly EMA sits at 61.32. RSI shows some divergence and is trending lower, out of overbought, meaning the pace of gains is cooling, not that a breakdown is coming. Traders must decide if this is a pause before another leg up or the start of something bigger. Volume node between 61 and 62 marks support if price slips. Price near 62.96, later 63.60.
The trade: A risk reversal. The 60.50 level looks like reasonable longer-term support. Sell the 60 put and buy the 65 call for about 55 cents with the stock near 63.60 (cheaper now after a roughly 1% drop). This creates a range: you can capture more upside, keep a cushion, and if weakness hits over the next month you get put the stock around $60.50. If the selling today reverses and momentum holds, the trade rides the move up.
RTX (formerly Raytheon)
RTX had a major dip in May, then a steady climb, then earnings sent it sharply higher. It is an aerospace name that keeps shining, with defense as another driver. Price action points to more upside. On the year it is up about 20%.
Technicals: Similar to Bank of America, it hit highs today then pulled back. It shows a classic setup: an earnings gap up (a real change in fundamentals), then a brief sideways-to-down consolidation, a bull flag. The play is to spot the initial highs near 221 and look for a push above them. Price has now fallen back to those old highs and is retesting them; old resistance often becomes new support. Another old high near 214.50 is more support. The 5-day EMA sits near the trend line and short-term channel edge at 219.15; the 21-day EMA (teal) is at 208.67. RSI is not making a new high but stays overbought, a mixed read with bearish divergence (price makes a higher close, RSI does not). Watch for RSI to make a new high with price for upside, or a break below 70 for a bearish signal. Volume is heaviest at recent levels of 195 to 202, matching a sideways range before earnings; the 198-200 area is the heaviest trading zone nearby. Price: 221.46.
The trade: A buy-write, looking for support. Buy the stock near this level (support seen around 221) and sell the January 260 call for about $5.60. This could be a longer-term hold. Selling the January call pushes any tax event into next year, gives room for upside capture, sets an exit above 260, and hands you 11 months to manage the position over the next five or six months.
