Defense & Aerospace Sector Stocks primed for next move!

Paul Bratby
Apr 9 · 4 min read

You would think with the current Woe’s of Boeing (BA) that the Defense and Aerospace Sector would be struggling at the moment. The Dow upward movement may have been stifled in the last few weeks due to BA. But this pull back in the Defence and Aerospace sector has lots of Defense Stocks ready to move higher on an Elliott 5th Wave Move.

$XAR, which tracks an equal-weighted index of US aerospace & defense companies has already started its 5th Wave move. The $XAR Chart below on the Weekly time-frame show the move really got started January 2019. The “BA Pullback” was a slight blip, but quickly formed a higher support level. Our Automated target zone in our Elliott Wave Indicator Suite is now showing a 5th Wave target of $110 for this ETF.

So this longer term view should give investors’ confidence that stocks in this Defense & Aerospace Sector have more room to grow this year.

XAR Chart Weekly Time-Frame

Lockheed Martin (LMT)

Let me discuss just a couple of examples in the Defense & Aerospace sector. Firstly, Lockheed Martin’s F-35 production will be ramped up soon with spending not just from the US. BUT from the UK as it has two Brand new Aircraft carriers to fill and a Retired Tornado fleet to replace.

What the Analysts Say

LMT has strong fundamentals and maintains high margin levels that account for strong profits. The Group usually releases upbeat results with surprise forecasts. Over the past year, analysts have consistently revised upward their sales forecast for the company. Average consensus of analysts, having a positive opinion, recommends over-weighting or purchasing of the stock. The mean Value of target price for LMT by Analysts is $347.41.

What am I thinking & trading?

I am already long on $LMT at $300.55 by trading an Elliott Wave, 5th Wave move on the Daily Time-Frame. Our automated target zone giving a potential price of around $318 for this current move. A 2:1 Reward to Risk. The chart below shows the entry, stop and target levels. This is a great example of using Sector ETF’s, basic fundamentals and combining with sensible technical indicators.

LMT Chart Daily Time-Frame

Axon Enterprise Inc (AAXN)

Axon Enterprise Inc is a favourite growth stock in the Defense & Aerospace sector with inclusion in many ETFs. This company, formally known as TASER International is totally different to LMT. The company manufactures security systems for law enforcement and military worldwide. Its share price is up 250% in less than a year and has more room to grow to our $90 target price.

What the Analysts Say

Again, a company with strong fundamentals with prospective high growth for the next fiscal year. Historically, AAXN has released figures that have been above expectations, leaving the company significant leeway for investment. Outperforming margins have led to analysts consistently recommending the Axon Enterprise Inc stock over weighting or purchase. The mean value of target price for AAXN by Analysts is $69.27.

What am I thinking & trading?

The chart below shows our entry at $55.48 on this potential Elliott 5th Wave move on the Weekly Time-Frame. Our automated 5th wave target zone is giving our $90 price target. This target price could be as much as 25 weeks away, so a longer-term investment. With the recent close at $60.32, there is still chance to get in this high growth stock.

AAXN Chart Weekly Time-Frame

How many more stocks in this sector on a 5th wave move?

Looking through the Defense & Aerospace Sector we can see around 70% of these stocks are ready to go or on their way! Obviously, differences between weekly and daily time-frame Elliott Wave counts will dictate trading or longer-term investment opportunities. We urge you to conduct your own analysis and invite you to use our Elliott Wave Indicator suite. Which is available for the ThinkorSwim, TradeStation, Muti-Charts and NinjaTrader Broker Platforms.

Paul Bratby

Founder of Trade The Fifth. Elliott Wave Software Suite for major worldwide broker platforms designed to help traders and investors succeed

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