DailyPlay – Boeing Co (BA) –  December 6th, 2021

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Market Outlook:

Another week of high volatility saw equities decline significantly on Friday. Both SPY and QQQ moved 0.87% and 1.74% lower respectively but still managed to maintain above key support levels which is encouraging heading into this week. We have seen significant rotation into Utilities and Staples as defensive sectors provide protection against the broader market sell-off. Small caps suffered the most last week ending the week declining over 2% and back to the major $213 support level, once again falling to the year-long range between $213 and $233 which is concerning. Volatility in bonds was also high as TLT broke above the major $151 resistance level with strong momentum sending yields below the 137 basis point level. 

BA Bearish Trade Idea:
Our bearish trade idea today is Boeing (BA). From a macro and fundamental perspective, BA has been on the backfoot due to lack of travel demand caused by COVID as well as the grounding of the 737 MAX airliner due to safety concerns. While we do see the slight improvement in revenues and EPS trends recently, the timing of the new variant causing additional travel restrictions adds further pressure for aircraft demand. We also see Airbus gaining market share in the narrowbody category relative to Boeing. From a technical perspective, BA has broken below the $205 area of support and has failed to break back above it in recent days. Both 1M and 6M trends are bearish and with a technical score of 3 (out of 10), BA is a weak stock that will likely continue lower. 

As this is a credit spread, look to take profits at 50% gain and cut losses at 100%:

• Take Profit: $4.17 Debit
• Stop Loss: $16.70 Debit

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