BOEING TECHNICAL ANALYSIS 20/12/2018
- Stop Loss sale price was triggered at $315.
- The Investment Thesis for Boeing is one of the strongest in the industrial space and the threats of the trade war and interest rates has to be evaluated against the Thesis.
- In looking to rebuild the position, the technical indicators have to approach the next Support Level.
Money Flow – is 44. 80 is ‘Overbought’, 20 is ‘Oversold’. There is room to the downside.
Momentum -has flattened, there needs to be a curl upwards.
On Balance Volume – trend is towards share selling.
TECHNICAL SUPPORT – was previously established at $315. The next level is $300.
STOP LOSS -should remain set at $315.
Why did the stock price pullback?
There always has to be a catalyst.
- December 19, 2018 the US Federal Reserve announced a 0.25% interest rate hike with a forecast of two further rate increases in 2018 (reduced from 3).
- The Fed expressed that the US economy was strong and there was a requirement to slow the economy which affects corresponding corporate profit growth.
- This caused a broader market selloff in which all stocks have declined in correlation.
What does that mean at MONEYWISEHQ
When a company which has $500B worth of production pre sold over the next seven years, with low probability of exposure to the effects of the US/China trade war, has a non company specific stock price decline then serious consideration has to be given to the possibility of an opportunity.
On December 17, Boeing announced a 20% increase in it’s annual dividend reflecting confidence in the companies profitability.
If the stock price drops below $315, respect the disciplined Stop Loss sell price and ask the question, ‘will I be able to buy it back at a lower, or equivalent price at some point?’.
When the broader market recovers, Boeing will be looked to for leadership.
As of 20/12/2018 the broader market is near an extreme ‘Oversold’ condition. Towards the end of year, there is the negative catalyst of tax loss selling, but the positive catalyst of seasonality.