Boeing stock price analysis: technicals look negative

The share price is forming a bear flag continuation pattern

Boeing shares are trading sideways and have failed to move higher with the broader markets. A recent congressional report blamed Boeing management for engineering failures that brought about the  two crashes of the Boeing 737 Max. 

Seasonally, the company rises in October after a strong September. Yet, the technicals are negative as the share price is forming a bear flag continuation pattern.

Congress blames Boeing for crashes

A congressional report was released in the middle of September which condemned Boeing the aviation giant along with the Federal Aviation Administration (FAA) for the two crashes that killed 346 people aboard two Boeing 737 Max craft. The accidents grounded the planes globally following several engineering flaws and mismanagement. This report came from the House Transportation and Infrastructure Committee. The investigation concluded after 18 months that Boeing employees emphasised profits over safety and the FAA allowed the company more sway over its oversight than should have been allowed.

The seasonals are positive for Boeing

Historically, October has been a good month for Boeing shares, as they have outperformed after a solid September. During the past 10 years, Boeing has increased 70 per cent of the time for an average gain of 3.1 per cent. This follows a robust September where the share price has been up 80 per cent of the time for an average gain of 3.5 per cent. Generally, Boeing continues to outperform in November rising 70 per cent of the time for an average gain of 3.3 per cent over the past 10-years.

Boeing stock technical analysis

Boeing shares have been moving sideways and appear to be forming a bear flag continuation pattern. This is a drop, a slight rebound and a consolidation period before prices continue to move lower. The 10-week moving average crossed below the 50-week moving average in November and has continued to slide which shows that a medium-term downtrend is now in place. Resistance on Boeing shares is seen near the 10-week moving average near 170. Support is seen near the March lows at $89.

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Short-term momentum is negative, as the fast stochastic generated a crossover sell signal in August and continued to move lower. The current reading on the fast stochastic is 21, just above the oversold trigger level of 20. 

Medium-term momentum is neutral. The RSI (relative strength index) is moving sideways and is in the middle of the neutral range which reflects consolidation. The MACD (moving average convergence divergence) histogram is printing in the black with a decelerating trajectory which points to consolidation. 

How to trade Boeing shares

Boeing shares have underperformed the S&P 500 index by 52 per cent in 2020, as the crashes that occurred in 2019 have weighed on the share price. The recent congressional investigation points the finger directly at Boeing saying employees emphasized profits over safety. While the share price has historically outperformed in October, it’s hard to believe that the company will be able to mount a rally in the face of this negative scenario. The technicals are negative as the share price is forming a bear flag continuation pattern as the trend and momentum point to lower prices. Look for Boeing to either trade sideways or test lower levels in October.

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