Market Overview

PreMarket Prep Stock Of The Day: Boeing

PreMarket Prep Stock Of The Day: Boeing

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

The “buy the laggards” trade continues in a big way with Boeing Inc (NYSE: BA) in Thursday’s session, making it the PreMarket Prep Stock Of The Day.

Its Own 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 close of $422.54.

Consolidation Station

Over the next nine months, it vacillated in a wide trading range from $320-$400, rallying when it was speculated it was was a pilot error and falling when it was speculated it was a mechanical error.

That long-term trading range was finally breached in January, when it had a monthly low of $302.72. Boeing rebounded to end the month near the bottom of the former range at $318.27.

COVID-19 Crisis Halts Rebound

Just as Boeing was sneaking back into the middle of its former trading range, the COVID-19 crisis sent markets into a tailspin. Now the triple whammy of the lingering 737 MAX saga, worldwide travel screeching to a halt and its enormous debt-load sent 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.

Another Trading Range

In only six trading sessions after the $89 low, it sprinted to $186.48 on March 26. Since that day, it has chopped around in a trading range from $120-$165.

Many of the rallies during that time period could be attributed to favorable Wall Street ratings changes from major brokerage. The days of declines were synonymous with weak days in the broad market.

Major Catalyst

Besides being a classic laggard play, Boeing shares staged a major rally on Wednesday, when it was revealed that Dan Loeb’s Third Point Capital revealed the company was one of its “monthly winners” for the month of May.

The issue opened higher on the session and had a brief retreat to $155.39 before ending Wednesday’s session at $173.16.

Moving Forward

Momentum and algorithmic traders have picked up on Boeing’s rally on heavy volume and jamming the issue higher in today’s session. As of 11 a.m. EST, it surpassed the former high for the rebound ($186.48) and is looking for more.

Based on the daily charts, the next daily resistance levels are its March 12 high ($189.65) and March 13 high ($226.99). For technical traders anticipating a 50% rebound in the issue from its March 2019 high to March 2020 low, use $267.50 as a potential target.

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

Photo by Steve Lynes via Wikimedia.


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