Boeing's Market Cycles Show Shares Likely Aren't Done Falling

Summary:

• Boeing Co BA shares were trading marginally lower Wednesday afternoon, following a two-day drop in response to the crash of one of its 737 MAX 8 planes.
• Dozens of countries have grounded the model, though the Federal Aviation Administration has doubled down on allowing it to fly in U.S. airspace.
• We believe that there is still room to decline before the end of the current market cycle.

Boeing Stock Weekly Chart

A new Boeing 737 MAX 8 airplane flown by Ethiopian Airlines crashed on Sunday just after takeoff from the capital city of Addis Ababa. This was the second 737 MAX 8 that has crashed since the company placed it into service in May 2017.

CEO Dennis Muilenburg firmly stated that, "We are confident in the safety of the 737 MAX. Since its certification and entry into service, the MAX family has completed hundreds of thousands of flights safely." Nonetheless, many countries have grounded the planes pending investigations.

Our analytical approach combines technical analysis with the market cycles that uniquely affect underlying stocks and commodities. The cycles for Boeing are represented by the semicircles, or cycle brackets, on the bottom of the chart above.

The bottom line is that Boeing stock is damaged, despite coming back a lot on Monday. Looking at the weekly chart, we can see the stock is in the declining phase of its current cycle. However, there is still room to decline, before the cycle ends. Our target is around $350 by May.

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