Boeing's Still the Best Bet Among Four Major Aerospace/Defense Stocks

NEW YORK (TheStreet) -- Boeing (BA) is outperforming General Dynamics (GD), Lockheed Martin (LMT) and Northrop Grumman (NOC) so far in 2015, and that trend should continue based upon daily and weekly technical charts and the key levels at which to buy on weakness and to sell on strength.

The last time these four aerospace/defense stocks were analyzed by these methods here was on Nov. 5, and the conclusion was the same. Here are the year-to-date performance measures and trading guidelines.

Boeing closed at $141.49 on Thursday. The stock is up 8.9% year to date and 11% from its 2015 low of $126.18 set on Jan. 8. Boeing is 12% below its 2015 high of $158.83 set on Feb. 20, providing the opportunity to buy on weakness. Boeing is a component of the Dow Jones Industrial Average, which closed 17,924 on Thursday, up 0.6% year to date.

General Dynamics closed $138.30 on Thursday, up 0.5% year to date. The stock is 5.3% above its 2015 low of $130.30 set on April 17 and 5.7% below its all-time intraday high of $146.13 set on Nov. 28. The stock held its 200-day simple moving average of $133.05 on April 20.

Investors looking to buy General Dynamics should place a good-till- canceled limit order to purchase the stock if it drops to $114.97, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good-till-canceled limit order to sell the stock if it rises to $150.57, which is a key level on technical charts until the end of May.

Lockheed Martin closed at $188.21 on Thursday, down 2.3% year to date and 10% from its all-time intraday high of $207.06 set on Feb. 25. The stock is trying to hold its 200-day simple moving average of $187.39.

Investors looking to buy Lockheed should place a good-till-canceled limit order to purchase the stock if it drops to $145.50, which is a key level on technical charts until the end of 2015.

Investors looking to reduce holdings should place a good-till-canceled limit order to sell the stock if it rises to $193.35, which is a key level on technical charts until the end of June.

Northrop Grumman closed at $153.46 on Thursday, up 4.1% year to date and 7.7% from its 2015 low of $141.58 set on Jan. 2. The stock is down 12% from its all-time intraday high of $172.30 set on Feb. 20, but is well above its 200-day simple moving average of $144.74.

Investors looking to buy Northrop Grumman should place a good-till-canceled limit order to purchase the stock if it drops to $142.21, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good-till-canceled limit order to sell the stock if it rises to $172.72, which is a key level on technical charts until the end of May.

Let's look at the daily and weekly charts for Boeing and provide the key technical levels at which to buy on weakness and the key technical levels at which to sell on strength.

Investors not familiar with technical analysis should begin with the notion that a price chart for a stock shows a road map of past price performance, which provides guidance for predicting future share-price direction.

Here's how to read a daily chart. There are two moving averages to follow; the 50-day simple moving average is in blue, while the 200-day simple moving average is in green.

Here's how to read a weekly chart. This chart shows weekly price bars going back to the beginning of 2007 and thus includes the crash of 2008, and then the current bull market for stocks that began in March 2009. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading below 20.00 is oversold and a reading above 80.00 is overbought.

A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising above 20.00.

A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining below 80.00.

Here's the daily chart for Boeing.


Courtesy of MetaStock Xenith

Boeing has been above its 200-day simple moving average since Jan. 7, when the average was $127.68. The stock gapped higher on Jan. 28, following a report of better-than-expected earnings, which led the stock to its all-time intraday high of $158.83 set on Feb. 20.

The stock slipped below its 50-day simple moving average on April 22, when the average was $152.20. That followed a negative reaction to Boeing's outlook.

The stock is now below its 50-day simple moving average of $150.76 and above its 200-day simple moving average of $135.07.

Here's the weekly chart for Boeing.


Courtesy of MetaStock Xenith

The weekly chart will remain negative if the share price at Friday's close is below the stock's key weekly moving average of $147.18. That's because its projected momentum reading of 45.97 is down from 60.36 from a week ago.

Investors looking to buy Boeing should place a good-till-canceled limit order to purchase the stock if it drops to $139.59, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good-till-canceled limit order to sell the stock if it rises to $150.89, which is a key level on technical charts until the end of May.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

 

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