Investing in Exelis stock: Trading in an uptrend (XLS)


Exelis’ market cap of just over 2 billion places the stock in the 18th place of the Aerospace and Defense industry. I have heard of Boeing or Lockheed, but I was totally ignorant of Exelis until XLS stock showed up in my watch list of the 3 Line Price Break system. The stock printed a green candle that surpassed the highs of the last 3 candles, completing a bullish signal. Can Exelis stock retest the all-time high at $12.90? For now, the question should be if XLS shares can climb above $12.


ITT Exelis began operations as a publicly traded company in October 2011 and has been trending upwards since the low of 2012 at $9.00. This month plenty of positive news made headlines concerning multi-million contracts awarded to Exelis Inc., such as the $9 million federal contract by the US Army Space and Missile Defense Command, the Air Force contract to research low-cost GPS alternatives and satellite technology contract to forecast space weather. In addition, Points of Light announced just yesterday that ITT Exelis is one of their 2013 leadership partners and predict that Exelis will post an earnings beat this quarter, since Exelis Inc. has both a positive Earnings ESP (2%) and a Zacks Rank of #2. The forthcoming earnings release is set to take place between February 27th and March 6th.

XLS stock trading

Although Three Line Price Break trading system has indicated a buy signal, it still needs confirmation with a new high today. Thus, an entry for a long trade should only be considered if XLS trades at $12.52 or higher. Proper risk management is advised by placing a stop loss either below Tuesday’s low or below the most recent support at $11.19.  The trading strategy suggests placing a profit target at double the length of the signal’s candle ($0.26), or at $12.03. Another option is to trade half of the position at that point and use a trailing stop, in case the breakout pushes XLS share price to the resistance level at $12.80.

More risk-averse traders might consider placing the stop loss lower than $11, since round numbers usually provide stronger support levels.

Disclaimer: I have no positions in any stocks mentioned but plan to initiate a long entry at XLS within the next 48 hours.