Chart Of The Day: Boeing Stock Set To Plummet Despite CEO Ouster
Investing.com | Dec 24, 2019 21:10
Boeing (NYSE:BA) has fired Chief Executive Officer Dennis Muilenburg in an attempt to salvage the wreck of its reputation after two lethal crashes of its 747 MAX plane in just 14 months killed over 340 people.
Get The App
Get The App
However, concerns remain that the company is continuing to put profit before safety, after naming David Calhoun, a board member for 10 years, as chief executive and president. Families of the crash victims are calling for the company to carry out a total revamp, bringing fresh ideas and new thinking to the company's operations.
Get The App
Get The App
With Boeing's stock down more than 20% since the MAX was grounded after the March 10 Ethiopian Air crash, can the Muilenburg ouster turn the price around? Despite the initial boost to the shares after the announcement, we bet it won’t.
Get The App
Get The App
Get The App
Get The App
The stock jumped 2.9% immediately after the news. However, it found resistance by the December congestion. If this one measure could have done the trick, there would have been a much more dramatic leap. If the stock returns now toward the $332 area it would trade according to a rising flag, bearish after the 8.25% drop in the two days of Dec. 13 and 16.
Get The App
Get The App
The pattern suggests that the rise is due to profit-taking after the sudden drop, as investors catch their breath and gauge the market. The congested upward rise indicates that the supply is being absorbed, signaling that bears are still in charge. A downside breakout signals another leg down, showing that sellers were eager enough to sell to lower prices to find new buyers, after drowning out the demand within the flag.
Get The App
Get The App
But that’s not all. A downside breakout would call for a target equivalent to the prior move, the 8.25% drop. If that follows through, the price would complete another, much more significant pattern.
Get The App
Get The App
Get The App
Get The App
The stock has been trading within a massive H&S top pattern since February 2018, which may have been put into place after the first crash in October 2018.
Get The App
Get The App
The price is already below the 50 and 100 WMA. If the price falls below the $320 neckline, it would signal a reversal. As with the flag, desperate sellers would be willing to lower their asking price to find new buyers. If they don't find them, they'll continue to lower their prices. This would create a panic, provoking other sellers to sell. And just to reach the 200 DMA implies a $50 drop, which is a long way down.
Get The App
Get The App
Conservative traders would wait for a close below $311, to establish a 3% filter, to weed out a bear trap, before committing to a short position.
Get The App
Get The App
Moderate traders may wait for the flag completion, including a price that closes below the continuation pattern for a couple of days, then returns to retest the resistance of the flag.
Get The App
Get The App
Aggressive traders may short now, provided they understand the risk of lack of confirmation for the pattern and have planned entries and exits that they stick to and that offer a workable risk-reward ratio.
Get The App
Trade Sample
Get The App
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.