The Boeing Company (NYSE:BA) 737 Max crash operated by Ethiopian Airlines is bringing out equity bears
News of a Boeing Co. 737 Max crash operated by Ethiopian Airlines is bringing out equity bears.
Futures contracts on the Dow Jones Industrial Average Index — where Boeing has the largest weighting — slid as much as 0.7 percent on Monday after Flight ET302 plunged to the ground minutes after leaving Addis Ababa en route to Nairobi, Kenya, killing all 157 people on board. This is Boeing’s second 737 Max crash in five months.
To make matters worse, China asked domestic airlines to temporarily ground those jets by 6 p.m. local time, and Ethiopian Airlines said it would ground them until further notice.
Boeing shares lost 19 percent in Germany and could slide in U.S. trading as concerns are increasing over the jet, said Eleanor Creagh, a Sydney-based market strategist at Saxo Capital Markets. Even a 5 percent fall would cut more than 100 points from the Dow, she estimated. When a Lion Air plane of the same model sank into the Java Sea off the coast of Indonesia last year, killing 189 passengers and crew, the shares lost almost 7 percent.
“Weakness transpiring in Boeing’s share price will hit the Dow,” Creagh said by phone. The stock has been responsible for about a third of the gains as markets recovered since the December low, she said.
Shares of the U.S. manufacturer have gained 31 percent this year, the most among Dow components and adding more than $55 billion in market cap. While that’s partly due to the improving sentiment over the U.S.-China trade talks, the company also reported a record cash pile for 2018 with sales reaching $100 billion for the first time in its 102 years.
The weekend accident happened as the U.S. stock-market rebound is showing signs of strain. The S&P 500 Index just posted its biggest weekly loss of the year as concerns surrounding global economic growth mounted. Risk appetite has weakened and the bar for positive surprises is now higher after a more than $9 trillion global equity rally since a December low. The Dow, where Boeing has an 11 percent weighting, dropped 2.2 percent last week.
In a March 11 report, Morgan Stanley said it expects a “degree of weakness and volatility” in the shares until there is clarity on what happened with this crash, adding it is premature to make any linkage to the Lion Air accident. Analyst Rajeev Lalwani wrote last month that the company’s stock has a “clear path” to $500 given broadly higher market multiples along with a potential order boost from a resolution in the China trade situation.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 445.02.
The projected lower bound is: 405.19.
The projected closing price is: 425.11.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 18.6754. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 60.13. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 3 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -69. This is not a topping or bottoming area. The last signal was a sell 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.
Rex Takasugi – TD Profile
BOEING CO closed down -0.020 at 422.540. Volume was 25% below average (neutral) and Bollinger Bands were 31% narrower than normal.
Open High Low Close Volume___
416.630 423.380 415.650 422.540 746,512
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 430.20 382.37 358.16
Volatility: 20 36 36
Volume: 872,751 924,214 861,833
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
BOEING CO is currently 18.0% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of BA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on BA.N and have had this outlook for the last 42 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.
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