Monday, November 18, 2024

Technical Analysis | Boeing Stock Is at Risk of Falling to This Level

Boeing Stock Is at Risk of Falling to This Level

Nov 18, 2024, 12:09 pm EST 

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Boeing 

BA

+1.93%

 stock is down again. If things don’t turn around soon, it could slide as far as $120.

That would represent a drop of 14% from Friday’s closing price of $140.19.

Shares of the commercial aerospace company were down 0.5% in early trading Monday at $139.49 while the S&P 500 

SPX

+0.39%
 was up about 0.2%. The Dow Jones Industrial Average 

DJIA

-0.18%
 had fallen about 0.2%.

Recent support for Boeing stock was about $146 a share, so the current price is problematic for traders, says Fairlead Strategies analyst Will Tamplin. While the stock is below that level, he said sellers look exhausted, and that he expects Boeing shares to head back to the mid-$140s this week. If they don’t, they could be headed to about $120, the “next major support” level.

That isn’t a call based on prospects for Boeing’s earnings. Tamplin, a technical stock market analyst, bases his views on what stock charts tell him about where investors have bought and sold shares in the past, and how that might affect what they do next.

The flip side of support for technical analysts is resistance. Boeing stock has had trouble getting through its 50-day moving average recently, points out CappThesis founder and market technician Frank Cappelleri. The 50-day moving average, at about $152, “has turned into a key resistance line ever since Boeing [stock] fell back below it in January” Cappelleri says.

Boeing stock has been weak since the election. Through early trading, shares were down about 8% since Nov. 5. Investors are concerned that U.S. tariffs on Chinese imports could create a backlash.

China is an important market for planes. It is expected to take roughly 20% of the 44,000 commercial jets expected to be sold over the coming 20 years. Between 2016 and 2018, before Covid-19 and the global grounding of the 737 MAX jet, China accounted for about 20% of Boeing’s deliveries.

While getting back to the mid-$140s would soothe Boeing investors, it would be better if the stock broke above the 50-day moving average. That will take some good news.

There has been some. CEO Kelly Ortberg, who started in August, has made progress toward a turnaround. Boeing has a new labor contract with workers in the Pacific Northwest, some new management, and a healthier balance sheet after selling stock to pay down debt.

Next up for Ortberg is more plane production. Wall Street expects Boeing to deliver about 540 planes in 2025, according to FactSet, up from the 360 anticipated this year. Boeing delivered more than 800 jets in 2018.

Reports have suggested Boeing might raise more cash by selling some assets, though the company has declined to comment. Jim Osman, founder of spinoff and breakup research firm The Edge, recently suggested that Ortberg go further than asset sales and split the company into three parts. One would be dedicated to defense, one would make commercial jets, and the third would be a service operation.

Osman followed up his initial report with a letter to Ortberg over the weekend. “Without transformative action, Boeing’s market share, reputation, and legacy will erode further,” wrote Osman.

Most analysts and investors, and perhaps even Ortberg, would agree with that sentiment. Whether that necessitates a breakup is far from certain.

For now, investors want to see progress. Traders would like to see some stability in the stock price.

Write to Al Root at allen.root@dowjones.com


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