- Boeing has one of the strongest Investment Thesis in the portfolio but trades within a defined range offering opportunity to Trade Around a Core Position.
- The stock is currently due for a pullback.
Money Flow Index (20 is Oversold, 80 is Overbought): at 79 BA is at an ‘Overbought’ Condition. The index may be skewed due to the severe December selloff.
Volume: has decreased significantly reflecting a lack of buying interest with mixed selling.
On Balance Volume (Accumulation/Distribution): shares have been accumulated very rapidly over the past two weeks.
MACD Momentum: is at the initial indication of curling downwards.
TECHNICAL SUPPORT: $315
TECHNICAL RESISTANCE: $360
What does that mean at MONEYWISEHQ
All the investors who bought in the $315 range have made a very fast 15% profit in two weeks.
The volume reflects that buying interest has slowed, shares have stopped being accumulated, Momentum is turning downwards and the price has reached the Technical Resistance Level of $360 which has been in place throughout 2018.
For the stock price to break above $360, there would have to be a significant catalyst in the form of a significant order or a Trade War resolution.
The next catalysts are
- Earnings report due January 30
- Trade Negotiations commencing January 31
Between now and the catalysts there is risk of profit taking with downside risk to $320.
Earnings season market action follows one of three patterns
- Stocks run up in anticipation of strong results, then selloff when earnings don’t meet high expectations.
- Stocks remain neutral until the release then either move up or down based on the actual results
- Stocks decline as a selloff due to uncertainty of the results, then climb when results are not as bad as expected.
It’s important to take a look at the technical analysis of each of the stocks in the portfolio and compare them against those three patterns, taking a defensive strategy to protect the recovery gains recently made.
The next ten days will determine the pattern, it’s important to be prepared if an opportunity presents itself.
Strategy: accumulate shares at the lowest risk entry point near Technical Support near $315 – $320. Maintain a disciplined Stop Loss near $310. The next level of support is $300.