Trade of the Day: Boeing Co Stock Could Take Off Again Soon
Shares of Boeing Co (NYSE:BA) have spent the better part of the past six weeks consolidating sideways after a strong 2017 and a vertical leap to kick off 2018. Traders and active investors would be wise to keep a close eye on BA stock for another leg higher.
Source: Phillip Capper via Flickr
Before digging into the charts and the trade idea, allow me to remind ye faithful that a key to success in the markets is to be open minded to all outcomes, regardless of one’s views. One of my former trader mentors used to remind me on a daily basis to always see and respect both sides, i.e. if a bullish/bearish view doesn’t pan out then respect that fact and adjust and adapt.
The current market environment is such that the volatility shock from late January and first-half February is still very present and at risk of jolting markets again. While that is my base case, I also want to have a list of stocks ready to buy should markets continue to push higher from the recent oversold bounce.
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One way to find stocks to buy in such an environment is to look for relative strength, i.e. stocks and or sectors/groups that are holding up relatively better compared to the broader stock market. Currently BA stock fits this description.
Boeing Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
When I last discussed shares of Boeing in this here column on Jan. 16, I pointed to extreme near-term overbought conditions and said that this is a good time to take at least partial profits in the stock, or even leg into small short positions for a 5%-7% pullback. To wit, BA stock then promptly slipped into a consolidation phase with a pullback of the range I suggested.
So far and through the lens of a trend-following strategy, this sideways movement, i.e. working off overbought readings through time, is healthy and Boeing stock could again be bought from a trading perspective upon a breakout.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
To get a better view of this recent consolidation phase, let’s look at the daily chart. Note that in mid January when I offered a cautionary note on BA stock, my proprietary TST Vertical X Pro Indicator flashed overbought readings by way of the blue down arrows on the chart.
If you are interested in learning this indicator and scanner to routinely find high probability overbought and oversold stocks and ETFs for counter-trend trades, join me today for a special webinar for InvestorPlace readers. Register here.
Over the past few sessions, BA stock has once again worked its way higher and consolidated right at the top end of the trading range as marked by the gray box. From here a break and hold above the $360 area could offer a trade to a next upside target around $380 while any strong daily bearish reversal will serve as a stop loss signal.
Check out Anthony Mirhaydari’s Daily Market Outlook for Feb. 23.
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