We do not cover Boeing (BA), but it’s pretty amazing how their CEO has been able to keep his job. As one expert said this morning that he must have known for a while now that they 737 Max was not going fly this year. The fact that he didn’t make that public…on top of everything else that has come-out on this story this year…is troubling.
Anyway, as much as the negative news on this company doesn’t want to seem to go away…and even though the stock has underperformed the market quite badly this year…it is still up slightly on the year. Yes, BA is down more than 25% from its March highs, so we certainly cannot say it has been a good stock this year, but it HAS also been able to stay in a range over the past 8-months. (The range is a relatively wide one, but BA has been stuck in that range for quite a while none-the-less.) Maybe it has been able to hold some-what steady since late spring is due to the strong rally in the broad market…and/or the fact that BA works within a duopoly (along with Airbus). Whatever the reason, the stock is now testing the bottom end of the $320-$385 range once again.
The technical set-up for BA has not been particularly good recently, so it will be important that the stock holds the bottom line of its range once again. As the attached chart shows, back in July, BA broke below its trend-line going back to the early 2016 lows. It then bounced back up to that trend-line in September…but that trend-line stopped the rally dead in its tracks. Its most recent decline has not been severe, but if the stock follows its recent “failure” (to regain that trend-line)…with a break below the bottom-end of its multi-month sideways range…it’s going to be quite bearish for the stock on a technical basis.
Having said this, the more import support level is the late December lows from last year…just below $300. That’s the “line in the sand” for BA…and thus any break below THAT level would be a disaster………However, we have to look at first things first. So right now we’re watching the bottom end of its sideways range of $320. If BA breaks below that level, it will probably drop to that “line in the sand” level of $300 very quickly.
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
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