Plane maker too high to catch a ride?
11/24/17
No matter what kind of flight-related pun you’d care to use—high-flying, soaring, to-the-moon—Boeing’s (BA) performance this year would pretty much fit the bill. As of Wednesday, BA was up around 70% on the year, and more than 162% from its February 2016 low—its biggest gain in any 21-month period since 1979. The word you’re looking for to describe that last upswing on the monthly chart “parabolic”—an adjective more often applied to booming tech stocks than supposedly crusty members of the Dow Jones Industrials club.
Boeing (BA), 5/1/1991 – 11/22/17

Source: OptionsHouse

Too high, you say? True, the last time Boeing was making comparable moves was in its mid-1970s to mid-1980s heyday, but the company’s recent numbers and industry analyst forecasts have been as positive as they’ve been in a while. Boeing’s Q3 earnings outperformed estimates (the latest in a string of solid quarterly numbers1), the company has continued to ink promising deals,and some analysts are pegging the stock to push above $300.3

However, recent price action may have hinted BA may be ready for a quick layover. After a strong breakout from its August trading range, the stock’s successive peaks came at marginally higher levels, with prices more or less consolidating since mid-October and, most recently, knocking on the resistance level of the October–November highs above $267. It looks like a perfect setup for another strong breakout, but it could also be interpreted as the stock getting a little low on oxygen.

Boeing (BA), 7/27/17– 11/22/17

Source: OptionsHouse

Boeing’s historical one- to five-day performance after pushing to new highs of this magnitude has been so-so: not bearish, but more-or-less in keeping with the stock’s long-term typical gain. For every breakout like the one in September, there are more that resemble the slightly higher highs of October and November.

Also, the one-day pattern on November 21 (the second-to-last bar on the daily chart)—a day with a higher high and higher low that opens and closes in the upper portion of the day’s range—has often  been followed by a few days of flat-to-lower prices. (The stock was trading lower on Wednesday.) By contrast, BA’s short-term (1–5 day) gains after making a 20-day low while still trading above the high of six months ago were much more bullish than average.

Boeing’s bullish fundamentals and positive analyst coverage may have the potential to push the stock to significant new highs, but there’s also potential room to board when the stock comes in for a brief landing.

 

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1 Macrotrends.net. Boeing (BA) EPS & PE Ratio History. 11/20/17.

2 Puget Sound Business Journal. Boeing firms up big 737 Max deal with Chinese aircraft leasing giant. 11/20/17.

3 Barron’s. Boeing: You Ain’t Seen Nothing Yet. 11/21/17.