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The Boeing Company Lifting Off - Will It Be A Short Flight Or An Upside Marathon?

The Boeing Company Lifting Off - Will It Be A Short Flight Or An Upside Marathon?
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The Boeing Company (NYSE: BA) has bounced nicely after setting a new short-term low in early August. At worst, the bulls are hoping for a continued rally to the downside gap at $135.

Boeing has been chopping around for most of 2014 with the net effect being a negative year-to-date performance. That makes Boeing one of the worst performers on the Dow Jones Industrial Average for the year.

Is the stock's very short-term upside performance merely a bounce in a bear trend or the beginning of something more serious on the upside?

What The Bulls Are Seeing

The bullish crowd in Boeing likes the dominant place it holds in the global aviation marketplace, along with AirBus. They also like the company's strong profit margins, the clean balance sheet and very strong cash flow figures.

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Technically, the bulls love the look of the last two days' action with a strong positive candle showing up from Monday's trading. The bulls see the chart setting up for a continued run up to at least $135 (from around $128 at Monday's close) and possibly higher.

What The Bears Are Seeing

The bears do not like Boeing's price-to-book ratio of six or its price-to-earnings ratio of 19 (compared to its projected earnings growth rate of less than five percent for next year). They also point to the fact that the company's enterprise value is far less than its market capitalization.

Technically, the bears look to Boeing stock's relative underperformance for such an extended period of time as being indicative of underlying operational issues and problems with the overall investment thesis.

The Technical Take

The technicians say that Boeing is an underperformer struggling to play catch-up with the rest of the market on the upside. They see the potential for the bounce to continue up to around $135, if the stock can eclipse $129.13 on a closing basis. On the other hand, they note that a break of $124.10 would lead to a quick test of $121.40 on the downside.

It looks like Boeing may make the run higher for the test of $135, but it may need a friendly broad market condition to do so.

Stock chart: 
Stock chart

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