Boeing (NYSE:BA) stock has had a wild ride year-to-date. After a steep ascent to start the year, the BA stock price began to descend steadily. And over the past few trading sessions, BA looks to have reached a lower high once again, which means it’s likely ready for another leg lower.
Before we look at the charts of Boeing stock in depth, allow me to caution investors regarding the broader stock market.
Over the past couple of weeks we have seen stocks trade in a very choppy, headline-driven range on lower volume. Because stocks are a highly correlated asset class, it is reasonable to assume that most stocks — not just BA — have also traded in a choppy fashion over the past few weeks. Choppy markets are difficult to trade in and can be dangerous to newer, less cautious traders and investors. Thus, the position I’m going to suggest here is to on the smaller side.
BA Stock Charts
When it comes to BA stock, all seemed to go well, in fact arguably too well from a momentum perspective into the late February period. But then the awful news of two plane crashes hit and the stock got punished. Before the plane crashes the stock was historically overbought from both a momentum and trend perspective, and that was true in multiple time frames. In hindsight, usually such extremes end up being critical inflection points for a stock, at least through the medium-term lens. And indeed for BA stock, it has traced out a series of lower highs YTD and since the late February parabolic rally high.
On the multi-year chart we can now also draw a narrowing wedge type of pattern, where the price action has traded in a narrowing band over the past few months.
Here, one could make both a bullish and a bearish argument for Boeing stock because it could break lower or higher out of the wedging pattern. However, for the time being, I am not looking to make either call but rather, I am focused on what is taking place in the smaller time frames. Over the past few days on this chart, Boeing stock once again reached the upper-end of the wedge pattern.
On the daily chart (below) we see that the latest rally in BA stock, which began in mid-August has measured about 15% and on Aug. 23, it reached a technical confluence resistance area. This area is made up of the diagonal down-trend line from the stock’s February highs, as well as the red 200-day simple moving average.
Lastly, the high on Aug. 23 may have also formed yet another lower high.
To me this looks like the path of least resistance for a trade and, for now, the path is lower for BA stock.
Active investors and traders could look to short Boeing around the $355 – $360 area, using a stop loss at $371 and a first downside target at $340.
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