Shares of Boeing Co (NYSE:BA) have rallied 5% in the past two days alone, adding to an already steep rally for BA stock since last fall. While the stock looks constructive through an intermediate-term lens, it now has to prove whether the recent multi-month gains are here to stay.
This week on Jan. 25, Boeing reported its latest financial results; the company came in with earnings-per-share of $2.47, beating analyst estimates of $2.34.
Investors liked the news and outlook, and BA stock followed with a technically sound move higher. But the warnings signs I am starting to see in Boeing stock, at least for the near-term, have to do with the rate of change of the stock’s incline, which looks unsustainable through a multi-week/month lens.
In discussions with institutional investors this week, much focus was around the ‘honeymoon’ phase that the stock market still seems to be in with the new Trump administration. While I do think there is much hope from a growth perspective around the plans from President Trump, as always, it comes back to a question on timing, or time frame.
The first two weeks of the new President have been filled with signing bills and putting plenty of changes in motion. Soon, however, the focus could begin to shift to a focus on ‘execution’ of these changes, which is where stocks may see a hiccup, i.e., a cause for a pause in the rally.
BA Stock Charts
Looking at BA stock through a multi-year lens we see that the longer-term up-trend remains well intact and that the yellow-50 week and blue-100 week moving averages over the past couple of months have once again begun to curl higher after a 12-month hiatus.
This simply mirrors a renewed leg higher in price, but it also gives investors better technical parameters to risk manage their positions by. This week’s rally in Boeing stock has pushed it cleanly past its previous all-time highs from 2015, causing the weekly MACD momentum oscillator at the bottom of the chart to reach overbought readings last seen at the 2015 highs.
This alone is no reason to entirely jump the BA stock ship, but rather, it’s a good time to consider taking at least partial profits in the stock — at least for those looking at it through an active investing approach. This means one could then look to re-buy the stock at lower levels in the coming months.
On the daily chart above, we see that in late October 2016 following its earnings results, Boeing stock broke past diagonal resistance as marked by the black diagonal.
From a momentum perspective, the stock peaked shortly thereafter and while the BA stock price continued to rise, upside momentum has developed a series of lower highs.
Again, this alone is no reason to get bearish on a stock, but coupled with the fact that the stock has popped 20% since last October and is now also trading 20% above its red-200-day-simple-moving average, taking partial profits in the stock seems like a prudent thing to do now. More active investors and traders could even consider shorting Boeing stock for a trade if we see a notable bearish reversal. From this perspective, BA stock in the coming weeks/months will likely find better support again around the $150-area.
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