During Monday's Mad Money program host Jim Cramer told viewers that Boeing (BA) should be bought on this latest weakness. Like Honeywell (HON) , it stands to benefit from the economic reopening with orders that are strong and interest rates that are low.
Let's check out the charts of BA.
In this daily bar chart of BA, below, we can see a number of bearish divergences unfolding. Prices have been in an uptrend from the May low, but it has been a struggle with long drawn-out corrections. Fitting a nice looking trendline is a problem, but we have a pattern of higher lows and higher highs for the simple definition of an uptrend.
BA is trading above the rising 50-day moving average line and above the rising 200-day line. Trading volume has been declining since June and the On-Balance-Volume (OBV) line shows a decline from December, telling us that sellers have been more aggressive in the past four months.
Prices made a new high for the move up in March, but the OBV line did not match this rally and neither did the Moving Average Convergence Divergence (MACD) oscillator — both of these indicators made bearish divergences.
In this weekly bar chart of BA, below, we can see that prices are in an uptrend above the rising 40-week moving average line, but the uptrend is looking fragile. The weekly OBV line peaked in late May and has been telling us that sellers of BA are more aggressive. The MACD oscillator is above the zero line, but it has narrowed in recent weeks and looks close to a downside crossover and take-profit sell signal.
In this daily close only Point and Figure chart of BA, below, we can see a potential downside price target in the $217 area.
In this weekly close-only Point and Figure chart of BA, below, we can see that the software is projecting the $405 area as a potential longer-term objective.
Bottom line strategy: The weekly Point and Figure chart of BA shows us significant long-term potential, but it is the short-run that we need to navigate through first. BA could retest the $210 area in the weeks ahead. A break of $195 would be more serious — it is not a forecast, just an observation.