Whether it’s news with the FAA, its 737 MAX, order cancellations, job cuts - it doesn’t matter. The negative talking points just keep piling up for Boeing.
Despite the tidal wave of headlines, Boeing stock is holding up to some degree. While the shares have been under pressure over the past few days, they're still off the lows.
Boeing stock is up 45% from the lows - even after falling about 30% from the late-March bounce.
Some investors expect more bad news when the company reports, and in light of the events of the past few months, that would come as little surprise.
However - the stock’s reaction to this bad news is what will be important.
Trading Boeing Stock
To be frank, Boeing is clearly not the stock or the company that it used to be. Known for its hefty cash flow and solid dividend, this aircraft and defense stock is in its dark days.
More volatile than ever, the stock is stuck between a noteworthy pullback from the recent high and a solid bounce from the lows. Right now, the charts tilt in the bears’ favor.
Of course, a bullish post-earnings move could change all that. But if the market reacts bearishly to the report, it could trigger a notable move lower.
Even with its powerful bounce, note that Boeing was able to reclaim only 38.2% of the decline from its 2020 highs. In comparison, the S&P 500 has retraced about 60% of the decline.
Now below its 23.6% retracement and the declining 20-day moving average, Boeing stock risks breaking below $124.
If it does, it could begin to fill the gap down toward $105. If support doesn’t step in above $100, it puts a retest of the lows on the table, between $90 and $94.
For the bulls to regain control, what they need to happen is quite clear.
First, the stock must reclaim the 20-day moving average and downtrend resistance (blue line). Above these marks puts $150 in play, which is the 23.6% retracement.
If BA stock can clear $150, it puts the 38.2% retracement and declining 50-day moving average in play.
More important, though, we know the quarter will be ugly. And if Boeing stock responds to that by rallying, investors may feel more confident about the bottom being in.