TBI's Thoughts [4]: Boeing (NYSE: BA)... A Massive Opportunity?

TBI
09-28

Hi everyone. Today I’ll be looking at a beleaguered company:

The Boeing Company (NYSE: BA)

BA’s chart is nothing short of phenomenal. It is retesting a 48-year (since 1976) support trendline. The company is facing a raft of issues, including machinist strikes (causing production of Boeing 737, 777 and 767 jets to be halted), production quality and safety issues, as well as mounting debt.

If we zoom in on the weekly chart, we can see BA consolidating in a symmetrical triangle pattern with lower highs and higher lows. More recently, it has been moving in a “coiled spring”-type falling wedge pattern as we wait for the machinists to approve a new contract with Boeing. The strikes have proven costly to BA’s valuation as it is expected to cost the company about US$3b, referencing the 2008 strikes.

A bullish divergence is forming as we retest the wedge support trendline (in purple), and the Stochastic is attempting to force a bullish crossover, which will result in a reversal to the upside.

The daily chart shows a significant bullish divergence forming (> 3 legs), with price coming into the 150.14 level. If there’s a shakeout and this 150.14 level holds, coupled with significant buying pressure, then this is very likely THE bottom that we’re looking for. Price continues to compress in the near-term, although it is close to breaking to the upside. As mentioned, the near-term catalyst will be a full resolution of the machinist strikes, or a geopolitical event which will cause defence stocks to rise together (i.e., Lockheed Martin, Northrop Grumman, General Dynamics, RTX Corporation).

Once BA breaks out of this falling wedge, we will likely see a very strong upside move back to the 233.85-245.04 gap that was created during the downtrend. The stock then enters “buy the dip mode”. However, if BA breaks down from the falling wedge and the 48-year trendline, then the most likely outcome is a move below 150.14 towards the 132.21 level. This is likely to turn BA into a “priced for 0” stock where the stock capitulates to lows below 100 that have not been seen since 2020.

Based on the technical setup, the risk-to-reward is higher for bulls compared to bears. Sentiment is peak bearish, bullish reversal patterns are in play, and the stock is retesting a 45-year trendline. Thus, I am initiating coverage on BA with a BUY.

Sentiment: BUY

Invalidation: Breakdown of 48-year support trendline

Summary (with Price Targets - NFA):

  • Retesting 48-year support trendline, with bullish divergence forming on the daily and weekly timeframes

  • Consolidating in a symmetrical triangle structure and a shorter-term falling wedge pattern

  • Breakout of falling wedge will see a retest of 233.85-245.04 area

  • Loss of 48-year support trendline and a falling wedge breakdown will see a retest of 132.21, and even possibly a “priced for 0” scenario

$Boeing(BA)$ $RTX Corp(RTX)$ $Northrop Grumman(NOC)$ $Lockheed Martin(LMT)$ $General Dynamics Corp(GD)$

@TigerWire @TigerStars @TigerEvents @CaptainTiger @MillionaireTiger

Technical Analysis
Here is the place for you to discuss & learn about technical analysis.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

Leave a comment
1
3