Investors are selling Boeing stock aggressively. It’s hard to see where shares are going next.
Shares of the commercial aerospace giant closed at $167.82, down 1%, on Monday, while the S&P 500 and Dow Jones Industrial Average fell 1.2% and 0.7%, respectively.
Rising bond yields, which signal the market’s growing belief that interest rate cuts aren’t coming, along with unrest in the Middle East, were responsible for a large proportion of Monday’s losses.
Boeing stock has now fallen for 11 consecutive days. It’s the longest streak since an 11-day streak in November 2018, according to Dow Jones Market Data.
Along with market-related factors, problems with the 737 MAX have weighed heavily on investor sentiment. An emergency door plug blowout on a 737 MAX 9 jet operated by Alaska Air on Jan. 5 has resulted in more regulatory oversight, slower MAX production, and falling earnings estimates from Wall Street analysts.
Shares are now below several support levels, including moving averages.
Stock support and resistance are terms technical market analysts use to determine where investors have tended to buy and sell a stock at points in the past. Oftentimes, support and resistance line up with fundamental data points such as price-to-earnings or price-to-sales ratios.
In the case of Boeing, there was some technical stock support around $170. That level also corresponded to Boeing shares trading at their lowest price-to-sales ratio relative to Airbus.
So recently, Boeing stock was about as cheap as it ever gets relative to its chief rival. The prior time that Boeing shares were that cheap on a price-to-sales basis was 2022. Now they are cheaper.
Fairlead Strategies analyst Will Tamplin sees some support for Boeing stock around $150 a share. That’s still down another 10% or 11% from recent levels.
Boeing stock is in “support discovery mode,” says CappThesis founder and market technician Frank Cappelleri. “In other words, we must wait to see where demand surfaces next. Once it does, that will be the new line the sand.”
Sometimes market technicians can’t help, except to say a stock is in new territory.
Boeing stock can’t, and won’t, continue to go straight down. Shares are now oversold. There is math behind the term, but it essentially means a stock has gone down a lot, quickly.
It’s also a sign shares are due for a bounce.
A bounce will be a short-term trading phenomenon. The longer-term direction of the stock will depend on how Boeing’s management handles the current crisis.