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PreMarket Prep Stock Of The Day: Boeing

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PreMarket Prep Stock Of The Day: Boeing

After months of deliberation, the 737 Max has been cleared by the FAA to resume flying. As expected, investors are welcoming the long-awaited news with shares of Boeing Co. (NYSE: BA) firmly in the green early in today’s session and making it the PreMarket Prep Stock Of The Day.

Bear Market Since March 2019: Long before the COVID-19 crisis gripped the markets, Boeing was its own little bear market.

Following a spectacular run from its 2016 year-end close ($155.68), the issue peaked in March 2019 at $446.01.

On March 10, 2019, Ethiopian Airlines flight 302, which was using a Boeing 737 Max aircraft, crashed six minutes after takeoff, killing all 157 people aboard.

In a volatile session on March 11, it had a range of $365.55 to $402.67 and ended the day at $400.01, down from its previous day close of $422.54.

Where Is The Bottom? While the broad market continued higher in 2019 and into early 2020, the issue was in a wide trading range from $320 to $400. It violated the bottom of the trading range in January and the COVID-19 crisis did the rest. Now the triple whammy of the lingering 737 MAX saga, worldwide travel screeching to a halt, and its enormous debt-load combined to send the issue to levels not seen since May 2013.

Its ultimate low in March at $89 coincided with its May 2013 low of $90.73.

Rebound Off The Low In June: On June 8, Boeing and other reopening plays were trading higher following strong U.S. job numbers and continued optimism surrounding the reopening of the economy. It lifted investor hope of an economic rebound and an uptick in production/shipping activity sooner rather than later.

After a much higher open, Boeing continued in that direction before peaking at $234.20 but retreated to end the day at $230.50. Unfortunately, the ill-found optimism didn't come to fruition, and shares of Boeing and other related issues relinquished much of the gains from the March low.

Institutional Buyers At The $150 Area: Since it takes days, weeks or even months for institutions to build a large stake in an issue, it's difficult to pinpoint once exact level that will be the exact bottom. However, taking cues from Boeing’s monthly chart, they were nibbling at the $150 area from July and into this earlier this month.

Over this period of time, the issue made all of its monthly lows in between $141.58 and S156.26.

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Sell The News: Before today's open, the FAA cleared the Boeing 737 Max to fly again after a 20-month grounding that was spurred by deadly crashes.

As expected the issue, the issue was soaring in premarket trading while it was being discussed during the show. It was trading at the $225 area with the premarket high standing at $225.40, which was improved on when it peaked at $226 just after 9 a.m. ET.

Co-host Dennis Dick was taking the news with a grain of salt.

"Are we now assuming all the airlines are going to by buying new airplanes?" he said. "When one of them do, this is your upside capitulatory move, time to ring the register."

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The full discussion from today’s show on the issue can be found here:

Price Action During The Regular Session: It did indeed turn out to be time to ring the register. In fact, Boeing opened at its exact high for the session ($223.02) and gave back its gains, trading around $212.07 at publication time.

Photo credit: pjs2005 from Hampshire

 

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