The Boeing Co. (BA) is in the Dow Jones Industrial Average (DJIA) and this morning it is also in the cross hairs of newly proposed trade tariffs by China. Leaving all the back-and-forth political "I told you so's" to others in the media, I want to take a look at the charts and indicators to give readers of Kamich's Korner some parameters this morning.
We last looked at the charts in early March, adding my two cents, " I think there is an increased risk that the broad market averages break their February lows. If that happens with BA we could see further declines to around $300 or lower." In pre-market trading Wednesday BA is around $315.
In this daily bar chart, below, we can see that the price of BA was below the 50-day moving average for most of the month of March and the slope of this line is now negative. One of my basic trading rules is to trade in the direction of the slope. The slower-to-react 200-day moving average line is still well below the market and intersects around $275. The daily On-Balance-Volume (OBV) line shows a peak in the end of February and the line has weakened for five weeks telling us that sellers of BA have been more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator made a high back in January and slipped below the zero line in the middle of March for an outright sell signal.
In this weekly bar chart of BA, below, we can see some weakness showing up in the indicators. Prices are still above the rising 40-week moving average line, but we know that is a lagging indicator. The weekly OBV line now shows a two-month decline. The weekly MACD oscillator crossed to the downside at the end of February for a take profits sell signal.
In this Point and Figure chart of BA, below, we can see a distribution pattern with a downside target of $291.
Bottom line: Investors, traders, portfolio managers and others will be having heated discussions today to decide whether to fight or run. To me it comes down to your cost basis and your risk parameters. We have a $291 price target from our Point and Figure chart but chart support on our daily bar chart is not visible until the $270-$255 area and more around $240. When a decline starts you never know how far down it will go. I wouldn't try to prove something.