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Boeing Testing January Support

Dow component Boeing Co. (BA) has been testing January support between 190 and 200 since Omicron hit the newswires on Black Friday. The resiliency, at least to this point, reflects optimism the next pandemic wave will be mild, allowing the travel industry to book decent numbers over the holiday season and into the first quarter of 2022.  Of course, a lot could change in the next week or two but a strong bounce here might offer a profitable entry for risk tolerant investors.

MAX Returning to Service in China

Multiple news outlets reported on Thursday that China’s aviation authority has finally issued an airworthiness certificate for the troubled 737 MAX jetliner. In turn, this sets the stage for a return to service in the Asian nation after more than 2½ years of grounding.  Industry experts now estimate that flights will resume by the end of the year or early 2022. This is a big deal because Chinese airlines comprise around 25% of Boeing’s annual MAX production.

Wells Fargo analyst Matthew Akers upgraded Boeing to ‘Overweight’ just before the Omicron news, noting positive risk/reward balance, with the stock lagging the SP-500 by 30% since March. He further outlines his bullish view, insisting “we now see limited downside as BA has de-risked 2022 delivery expectations and is less susceptible to supply chain disruption given its large inventory of completed aircraft. BA is most levered to the post-COVID recovery among our coverage, and should outperform as air travel continues to normalize.”

Wall Street and Technical Outlook

Wall Street consensus has improved in the last three months, now standing at an ‘Overweight’ rating based upon 14 ‘Buy’, 4 ‘Overweight’, and 4 ‘Hold’ recommendations. However, three analysts still recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $164 to a Street-high $306 while the stock is set to open Monday’s session about $72 below the median $271 target.

Boeing broke a two-year top with support near 300 in the first quarter of 2020 and sunk to a 6-year low in March. The subsequent uptick topped out in March 2021 after recouping half of the 357 point downside and settled into a channeled decline that’s now flirting with an 11-month low. Accumulation, as measured by On Balance Volume (OBV), has dropped to the lowest reading since August 2020 when the stock was trading near 160. Taken together with mixed relative strength readings, sellers are likely to retain control into year’s end.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

This article was originally posted on FX Empire


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