This is a WEEKLY chart. Each candle represents a week of price activity.
Let me start by saying I don't usually invest / trade based on a Head & Shoulder pattern. I am not, and do not claim to be, anything but "basically" informed about this pattern. Please feel free to correct me if I need it. I did reference StockCharts.com for info on the Head and Shoulders Top. This is the address of the page
school.stockcha...ts.com/doku.php?id=chart_a...
Let's assume this is a H&S pattern. Well then my downtrend support line could also be called the "Neckline". This is a good place to look for BA to reverse. But if BA does not reverse here then it might be a good idea to research "Measured Move" or price target of a H&S pattern. Especially of you are holding BA stock or want to start a new position. By the way, Price Target is item #9 on the StockCharts.com page I referenced earlier.
No matter what the chart says to me today, lets all agree that Boeing is not going out of business so it is not going to zero. Boeing has a good business, little competition, and is a leader in its business segment. But that doesn't mean it can't go down. The question for me is where will it go next. I also like to consider the viability of potential "price targets". Is $130 a viable price for BA? Before you answer, please consider that I could have asked you, anytime over the last two years, if $260 was a viable price for Boeing...
Boeing makes airplanes. They supply many airlines around the world. But thanks to a virus that shall remain unnamed in this post, airlines are cancelling flights. As travel demand goes down so does the demand for new planes. As the demand for new planes goes down so does Boeing's sales. As Boeing's sales go down so does their ability to "earn" money (earnings).
Side Note - If you buy companies or their stock based on P/E ratios you need to be extra careful in times like this. The E in your ratio is an estimate! What if your E gets revised down? As the denominator of a fraction gets smaller, the value of the fraction gets larger. I understand that the P in your ratio is also getting smaller recently. But please don't blindly accept the value of the ratio with the same E in the denominator. If the value of E gets smaller, you might be buying a stock based on a larger P/E ratio than you think.
Back to Boeing's business. They have a new plane called the "MAX". You know the one I am referring to. It is grounded at the moment. When the FAA decides to re-certify the Max, that will be good for Boeing. But how good? Are the airlines - that don't need new planes because their demand has dwindled - going to buy the planes and put them in service? Will the re-certification lead to more sales immediately? Admittedly this is an oversimplified argument to make. But I think we need to consider it and the possibilities...
The Good News -
There is a chance that BA could bounce right here. BA's closing price on Friday was just above the downtrend line. It actually gained a lot of ground going into the close on Friday. Too much in my opinion but who am I?? If BA can stay above the downtrend line it may start going up from here. If you are waiting for Boeing to start heading higher, pay attention. You could start a small position around here as a test. But only a very small one. If BA drops back below the downtrend line I would personally sell that very small position and wait.
What would you be waiting for? Less fear of getting sick and more passengers booking flights. Better news in general. Deliveries of airplanes that were manufactured but are now sitting in the desert. How about a date when the airlines are going to start flying to all of Asia again. Anything positive.
Let me start by saying I don't usually invest / trade based on a Head & Shoulder pattern. I am not, and do not claim to be, anything but "basically" informed about this pattern. Please feel free to correct me if I need it. I did reference StockCharts.com for info on the Head and Shoulders Top. This is the address of the page
school.stockcha...ts.com/doku.php?id=chart_a...
Let's assume this is a H&S pattern. Well then my downtrend support line could also be called the "Neckline". This is a good place to look for BA to reverse. But if BA does not reverse here then it might be a good idea to research "Measured Move" or price target of a H&S pattern. Especially of you are holding BA stock or want to start a new position. By the way, Price Target is item #9 on the StockCharts.com page I referenced earlier.
No matter what the chart says to me today, lets all agree that Boeing is not going out of business so it is not going to zero. Boeing has a good business, little competition, and is a leader in its business segment. But that doesn't mean it can't go down. The question for me is where will it go next. I also like to consider the viability of potential "price targets". Is $130 a viable price for BA? Before you answer, please consider that I could have asked you, anytime over the last two years, if $260 was a viable price for Boeing...
Boeing makes airplanes. They supply many airlines around the world. But thanks to a virus that shall remain unnamed in this post, airlines are cancelling flights. As travel demand goes down so does the demand for new planes. As the demand for new planes goes down so does Boeing's sales. As Boeing's sales go down so does their ability to "earn" money (earnings).
Side Note - If you buy companies or their stock based on P/E ratios you need to be extra careful in times like this. The E in your ratio is an estimate! What if your E gets revised down? As the denominator of a fraction gets smaller, the value of the fraction gets larger. I understand that the P in your ratio is also getting smaller recently. But please don't blindly accept the value of the ratio with the same E in the denominator. If the value of E gets smaller, you might be buying a stock based on a larger P/E ratio than you think.
Back to Boeing's business. They have a new plane called the "MAX". You know the one I am referring to. It is grounded at the moment. When the FAA decides to re-certify the Max, that will be good for Boeing. But how good? Are the airlines - that don't need new planes because their demand has dwindled - going to buy the planes and put them in service? Will the re-certification lead to more sales immediately? Admittedly this is an oversimplified argument to make. But I think we need to consider it and the possibilities...
The Good News -
There is a chance that BA could bounce right here. BA's closing price on Friday was just above the downtrend line. It actually gained a lot of ground going into the close on Friday. Too much in my opinion but who am I?? If BA can stay above the downtrend line it may start going up from here. If you are waiting for Boeing to start heading higher, pay attention. You could start a small position around here as a test. But only a very small one. If BA drops back below the downtrend line I would personally sell that very small position and wait.
What would you be waiting for? Less fear of getting sick and more passengers booking flights. Better news in general. Deliveries of airplanes that were manufactured but are now sitting in the desert. How about a date when the airlines are going to start flying to all of Asia again. Anything positive.
