Boeing Stock Fails to Break Out as Macro Picture Worsens

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The Boeing Company (BA) shares fell 2% during Monday’s session despite moving higher prior to the market open. Reuters reported that the Federal Aviation Administration (FAA) is calling senior U.S. airline officials to tell them that the agency may approve the 737MAX’s return to service before mid-year. While the FAA hasn’t set any specific time frame for completion of certification work, it’s pleased with Boeing’s progress in recent weeks toward achieving key milestones that could put it on track for mid-year.

In addition, the company’s 777X completed its maiden voyage on Saturday. The aircraft carries a list price of $420 million. Deliveries have been pushed back to next year amid technical issues and an upcoming review by the FAA, but the successful flight provides Boeing with a boost ahead of its quarterly financial results due on Jan. 29. Emirates will receive the first 777X upon successful certification.

The bullish momentum was offset by market weakness stemming from the coronavirus breakout that threatens to derail the fragile global economy’s growth. Moving forward, traders will be keeping a close eye on Boeing’s upcoming earnings report, which is due on Wednesday.

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From a technical standpoint, the stock briefly rebounded above trendline support before moving back below during Monday’s session. The relative strength index (RSI) remains moderately oversold at 39.84, and the moving average convergence divergence (MACD) continues to trend lower. These indicators suggest that the stock may be oversold, but there’s little upward momentum on a technical level to support a move higher.

Traders should watch for a breakout from trendline resistance at $317.80 and for the stock to move back into its previous price channel. If that occurs, the next major area of resistance is the 50-day moving average at $342.25. If the stock moves lower, traders could see shares hit support at prior lows of $302.72 or trendline support at $295.50. 

The author holds no position in the stock(s) mentioned except through passively managed index funds.

Source: Investopedia

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