B/E Aerospace (BEAV) Falling Out of Key Technical Pattern

Try airline supply stock BEAV for a bearish trade

   

B/E Aerospace  (BEAV),  manufacturer of interior products for airplanes, has seen a sharp rally off its August 2012 lows.  Given the company’s close association and exposure to the commercial aviation business, it’s no surprise that the stock’s now 10-month-old rally came much in correlation with a rally in the airline stocks.

beav 12 month chart 300x219 B/E Aerospace (BEAV) Falling Out of Key Technical Pattern
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To be exact,  B/E Aerospace rallied to the tune of 80% from early August 2012 up to its recent highs last week on June 7.  To be fair, the rally has been orderly, with a series of consolidation and rally phases, which at the margin speaks for potential further upside in the stock over the medium term.  If we look a little closer however, note that the stock took an already nicely up-sloping chart and flipped it into a steep ascent in March of this year.  This acceleration of the upward trend also caused the stock to break above its longer-standing up-trending channel (red parallel lines) in March, and over time formed an ascending triangle (blue dotted lines).  The ascending triangle, if broken to the downside, has bearish repercussions for the stock, and at the moment the chances for such a break are increasing by the day.

beav daily chart 300x219 B/E Aerospace (BEAV) Falling Out of Key Technical Pattern
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On the closer-up daily chart looking back to March, we see that the stock hasn’t done much over the past month and a half, but did continually find support on a daily closing basis at a line around the $62 mark.  Yesterday, June 12, the stock once again showed weakness which may soon give the stock enough downside momentum to press through $62 to the downside.  Should the stock be able to break below $62 on a daily closing basis it would be able to target the $59 area fairly quickly, which also coincides with the longer-standing uptrend line from August 2012.

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.


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