As you might have heard Boeing (BA) had some pretty rough last few weeks. Everything started after their best-selling jet 737 MAX was involved in two disaster crashes in just five months. Ethiopian Airlines and Lion Air Crashes sparked a very intense and important discussion – is this a coincidence or there is a bug in the jets. Immediately after the second crash, Europe forbade the flights with the eventually defect jets and afterwards Trump did the same thing. Obviously all these grounded jets means a lot of cash outflow from Boeing.
After this brief summary let’s go to the charts. We can see the 200-Simple Moving Average (the yellow line) is very near to the current price, it sits at 360$ exactly. So far we haven’t tested the line itself but in my opinion it is very likely in the coming days. We can also see that volume is pretty heavy in the last few sessions of trading and on the initial news it was a lot heavier – what does this mean ? Well this means that institutions have been buying and dumping on the news. The wide green bar indicates that a lot more buying that selling has occured on that specific day, but on the following two the bears kind of won the fight.
Game Plan 1
So what might be an interesting strategy for this stock. Lately there has been incredible support for BA at the 365 level, so I think that a possible strategy is to slowly accumulate small size from 365 to 361. If we break the 200-day on heavy volume you get out, if you we break the 200 on low volume and we immediately push back up, holding is the better option. Always have a plan when you enter a position. Always set stops !
Game Plan 2
Wait for the break of the 200 and then decide if it is worth it. The risk here is that BA won’t go that low and you will “miss” a big move uspide – so obviously this is not a risk at all, you can get in everytime you want in it.
Game Plan 3
Don’t do anything until the smoke clears out. Testing and evaluating of the crashes is underway and there is HUGE amount of headline risk out there for Boeing. People with no taste for volatility should keep away from this stock until this scandal is resolved.
Guys remember to always have a plan for a stock ! Hope is not a plan. Let me know your thoughts for this stock, which has been an incredible superperformer the last years.