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Boeing Earnings Preview - Must-Know Support and Resistance

Boeing has been a tough stock to own over the past five months or so. Will it get worse before it gets better? Let's look at the charts.

Boeing  (BA) - Get Boeing Company Report is scheduled to report earnings before the opening bell on Wednesday. The lead-up to the results hasn't been an easy ride for investors.

As if the headaches associated with the 737 MAX weren’t enough for investors to deal with, they’re also trying to gauge the damage to the planemaker from the coronavirus. 

While air traffic is staging a slow but sure recovery, there are concerns that a resurgence in virus cases will put a lid on the rebound. Worse, it could cause traffic to dip again, further straining the airlines.

Investors just heard from companies like Delta Air Lines  (DAL) - Get Delta Air Lines, Inc. Report, Southwest Airlines  (LUV) - Get Southwest Airlines Co. Report and others. While the market handled the news well, these companies lost billions while management expects it to be a multi-year recovery in traffic.

That’s not good news for Boeing, which depends on jet sales to drive its results. Perhaps that’s why the stock has struggled even as there’s been solid progress made on the 737 MAX front. Recent sanctions from China don't help matters. 

Trading Boeing

Daily chart of Boeing stock.

Daily chart of Boeing stock.

What a fickle stock this has been. On the plus side, the stock has traded in a very well-defined manner over the last four to five months. Unfortunately though, it’s been stuck in a downward channel (blue lines).

The stock has struggled this week leading up to earnings, down almost 6%. Over the past three days, shares are down almost 7%.

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After acting as support in early August, the 100-day moving average has been acting as resistance since September. Between that measure and channel resistance, Boeing has been unable to sustain its rallies to the upside.

On a bullish reaction, I want to see a close over $173, putting Boeing stock above both marks. That would open up the $190 level and the declining 200-day moving average. Above that puts $200 on the table, followed by the June high up at $234.20.

Why Jim Cramer Is Looking to Buy Boeing Stock Tuesday: 

On the downside, Boeing is already flirting with a move below $160. This level has been support over the past month, following the stock’s previous bounce from channel support.

Should shares break decisively below this mark, it puts the September low in play at $145.02, followed by channel support near $135. A decline of this magnitude will also put Boeing stock below the 23.6% retracement near $150.

Now some could say the bad news is behind Boeing and the future is starting to look brighter. That’s true, but it doesn’t necessarily mean a breakout is in its near future.

Should shares correct lower and lose channel support in the coming days and weeks, it puts the $120 level in play and the 200-month moving average currently at $117.63.