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Will Boeing Descend or Gain Altitude? - What the Charts Say

Boeing hit a new 52-week low on Friday. Support is nearby, but there's no guarantee it will hold for the stock.

It’s been a tough week for Boeing  (BA) . Shares were hammered on Thursday, falling 8%. On Friday, the stock gapped down in early trading but has since pared those losses and was  down just 1%. 

Now what?

Boeing has endured a lot of reports and rumors over the past few days. That’s actually true over the past few months as well, but specifically looking at the recent news it’s been a busy few days.

Thursday’s action was noteworthy, as investors ignored the good news and focused on the bad news. Despite reports suggesting Boeing’s 737 MAX could make its recertification flight in the next few weeks, investors dumped shares on reports that Airbus, Boeing’s main competitor, may be cutting back on production. The fear here is obvious in that Boeing may also cut back on production.

If the production reports are true, that’s also bad news for companies like General Electric  (GE)  and United Technologies  (UTX) .

After Boeing shares hit a low on Friday, let’s look to see if traders can make sense of the charts.

Trading Boeing Stock

Weekly chart of Boeing stock.

Weekly chart of Boeing stock.

Boeing stock has a low of $249.80 on Friday. That’s right into the $240 to $250 support zone shown on the weekly chart above (blue box).

Should the area fail to buoy Boeing stock in the ensuing days and weeks, investors have to be open to the idea that shares can fall to the $220 to $225 area. Below that, and $200 is on the table, technically speaking.

I’m not looking at Boeing near $260 a share right now, panicking, and thinking $200 is next. We have a very well-defined order of support levels to be cognizant of. 

Should the current support zone hold ($240 to $250), the next order of business is the 200-week moving average.

Last week, this moving average was the support that bulls needed. It came into play during a tough market environment and gave the stock a modest but meaningful bounce. Earlier this week, the stock put in a rebound up to $300. Unfortunately, the rebound didn’t stick and Boeing stock wasted no time unwinding those gains and knifing right through the 200-week moving average.

Now that we have a temporary low in place, Boeing bulls must see the stock reclaim the 200-week moving average. If it does, it puts $280 in play, as well as the $300 mark.

If shares can’t reclaim the 200-week moving average, investors must keep an eye on Friday’s low. Below that and shares will need to probe around the $240 to $250 zone, looking for a new low and some support.

So keep it simple, and keep it cautious. I like to say when the Volatility Index (VIX) is in the $30 to $35 range or above, traders need to reduce their position size, take less trades and use more caution. Right now, the VIX is at $48, so don’t be a hero.

With Boeing, see how it handles the 200-week moving average and go from there.