Boeing's Protracted Effort To Regain Credibility Pushes Traders Toward Direxion's BOEU, BOED ETFs

As one of the iconic industrial giants, aerospace and defense juggernaut Boeing Co (NYSE:BA) represents an important cog in the U.S. and global economic machinery. For the most part, management's efforts to right the ship appear to have resonated with investors, leading to BA stock rising over 24% on a year-to-date basis. For comparison, the benchmark S&P 500 has gained under 15% during the same frame.

Fundamentally, much hinges on the overall certification and eventual delivery of Boeing's 777-9 aircraft. Representing the next generation within the 777 family, the X-designation employs new technologies, particularly carbon-composite wings with folding wingtips, improved aerodynamics and the new GE9X engine — one of the most advanced commercial engines Boeing has ever sourced.

According to Boeing's technical specifications, the 777X should deliver 10% lower fuel use and emissions, along with a 10% reduction in operating costs relative to the competition. On paper, that sounds like positive news for BA stock. However, it's also fair to point out that the certification process for the new airplane has dragged on, which could jeopardize its introduction into service. Currently, the 777X is slated to make its debut in mid-2026.

While BA stock has been weathering recent storms, the journey has been turbulent. What keeps investors busy is that Boeing isn't exactly known for consistent financial performances. Going back to October 2020, the company has mostly missed on the top and bottom lines, with only a few clean reports occasionally poking their heads above the muck.

Moving forward, it's anyone's guess where BA stock may head next. In the past 52 weeks, the security has moved up nearly 41%, which is much higher than the S&P 500's return of 18.33% during the same period. But since mid-July, BA has been stuck in a descending consolidation, potentially a victim of certification delays, along with multiple crashes that have cast doubt on safety.

The Direxion ETFs: Because Boeing stock could move in a variety of ways, financial services provider Direxion offers two countervailing exchange-traded funds. For the optimists, the Direxion Daily BA Bull 2X Shares (NASDAQ:BOEU) tracks 200% of the performance of BA stock. On the other end, the Direxion Daily BA Bear 1X Shares (NASDAQ:BOED) tracks 100% of the inverse performance of the underlying security.

Primarily, a key selling point of Direxion ETFs is that they facilitate a convenient mechanism for speculation. Generally, those interested in leveraged or inverse positions must engage the options market, which present unique complexities. With Direxion's specialized funds, however, traders can acquire the underlying units and trade them much like any other publicly traded security. Therefore, the learning curve is mitigated.

Still, these financial products are not devoid of risks. First, adding leverage or incorporating an inverse profile on an underlying security tends to amplify volatility. Second, Direxion ETFs are designed for exposure lasting no longer than one trading session. Going beyond this recommended period may expose unitholders to positional decay stemming from the daily compounding effect.

The BOEU ETF: Since the start of the year, the BOEU ETF has gained over 49%. However, the trailing month has been volatile, with the fund losing almost 11%.

• Currently, the BOEU ETF sits below the 50-day moving average and is right on the 20-day exponential moving average, thus reflecting near-term weakness.
• The next several sessions may be critical for the bull fund's viability as the price structure presently resembles a bearish head-and-shoulders pattern.

The BOED ETF: As expected, the BOED ETF has been a weak performer this year, losing 20%. Still, in the trailing month, the inverse fund has gained over 4%.

• Thanks to near-term momentum, the BOED ETF has moved firmly above its 50 DMA and is attempting to build support off the 20-day EMA.
• Although the rising price structure of the inverse fund may look appealing, volume levels are very low, warranting caution for prospective traders.

Featured image by Tommy Olsson on Pixabay.