(Updated 1PM EST ) Last night we were seeing Boeing stock shares start to crash and it looked like it was setting up to break through support. After the horrible earnings report Boeing stock is up. This is something amazing for a company that has a negative $4.3 billion cash flow.
On the conference call earlier today, CEO Calhoun said that the MAX production will ramp up slowly and work on the backlog of 400 planes that are grounded. This means the 737 MAX will continue to be a problem into 2021.
“We recognize we have a lot of work to do,” said new CEO David Calhoun in the company’s news release. “We are focused on returning the 737 MAX to service safely and restoring the long-standing trust that the Boeing brand represents with the flying public…fortunately, the strength of our overall Boeing portfolio of businesses provides the financial liquidity to follow a thorough and disciplined recovery process.”
The question remains, “Why is Boeing stock up after bad earnings?”
I have two possible answers:
- Dead Cat Bounce: Many traders bought today because they saw an opportunity to buy a declining stock that they hoped would go up. This has built some momentum and increased the price. Boeing is massive company can stay afloat for sometime. However, if the negative reports continue, it will only be a temporary bounce up.
- See No Evil: Investors are completely oblivious to financial reports in today’s market. Everything appears to go. This could end very badly for everyone.
I wouldn’t recommend Boeing to my mother and would caution investors to look at the underlining financials of Boeing and every company before investing. I remember all too well the stampede of investors that bought bankrupt companies with the hopes that they will go up.
Boeing stock is dropping in late trading. We are expecting Boeing earnings to be less than stellar that would typically cause a stock to dip, but market experts are predicting more bad news for investors. Recently Boeing has dealt with numerous 737 issues, but now the coronavirus outbreak is grounding the airline industry. The White House is reported to be considering suspending flights from China.
Boeing stock price is trending down and is near its 52 week low of 302.72. Shares are down roughly 13% from a 52 week period. It is currently below the SMA 20, SMA 50 and SMA 200. Technical indicators are showing a strong sell. Investors should look for a break below 309. This could signal a significant drop in stock price.
Big Movements – Investors should look for major moves on Boeing’s conference call at 10:30 Eastern time tomorrow.
US investors are focused on the Fed’s decision on the interest rate. In anticipation of the regulator’s meeting, US President Donald Trump once again urged officials to ease the monetary policy, as lower rates could help the US pay off its growing public debt. Nevertheless, most observers are confident that the Fed will not change the rate, and it will remain at the same level of 1.75%. Earlier, regulator officials have already stated that significant changes are necessary in the current conditions in order for the monetary policy to be changed, and such has not yet happened. In addition, officials may try to reassure investors who fear a worsening global economic situation due to the spread of coronavirus in China.
European investors remain concerned about the situation in China, although they began to take the alarming news about the deadly virus much more calmly. Meanwhile, the number of people infected with a new disease officially exceeded the number of people infected during the outbreak of SARS in 2002–2003. Also, pressure on EUR has the latest IMF report on the state of the Italian economy. Fund specialists believe that Italy’s public debt, which now accounts for 135% of GDP, will continue to increase due to poor economic growth and higher pension payments. Thus, the agreement of Rome with Brussels to reduce the Italian public debt may be in jeopardy.
Boeing Stock Recommendations
Jan-22-20 Downgrade Vertical Research Buy → Hold $388 → $294
Jan-09-20 Downgrade Berenberg Buy → Hold $410 → $350
Jan-08-20 Downgrade Cowen Outperform → Market Perform $419 → $371
Jan-07-20 Initiated Longbow Underperform $300
Oct-21-19 Downgrade UBS Buy → Neutral $470 → $375
Oct-21-19 Downgrade Robert W. Baird Outperform → Neutral $445 → $342
Oct-21-19 Downgrade Credit Suisse Outperform → Neutral $416 → $323
Oct-18-19 Reiterated BofA/Merrill Neutral $415 → $400
Oct-09-19 Reiterated BofA/Merrill Neutral $420 → $415
Oct-02-19 Reiterated Robert W. Baird Outperform $470 → $445
Jul-25-19 Downgrade Wolfe Research Outperform → Peer Perform
May-07-19 Downgrade Barclays Overweight → Equal Weight $417 → $367
Apr-08-19 Downgrade BofA/Merrill Buy → Neutral $480 → $420
Mar-27-19 Resumed Citigroup Buy
Mar-19-19 Downgrade Argus Buy → Hold
Mar-12-19 Downgrade Edward Jones Buy → Hold
Feb-28-19 Reiterated UBS Buy $500 → $525
Feb-05-19 Reiterated Bernstein Outperform $435 → $459
Jan-31-19 Reiterated Canaccord Genuity Hold $360 → $380
Jan-10-19 Upgrade Morgan Stanley Equal-Weight → Overweight
Boeing Stock 1 Day Moving Averages – Strong Sell
Name Value Action
Exponential Moving Average (5) 318.11 Sell
Simple Moving Average (5) 316.60 Sell
Exponential Moving Average (10) 320.84 Sell
Simple Moving Average (10) 321.47 Sell
Exponential Moving Average (20) 325.63 Sell
Simple Moving Average (20) 326.59 Sell
Exponential Moving Average (30) 329.80 Sell
Simple Moving Average (30) 328.34 Sell
Exponential Moving Average (50) 336.33 Sell
Simple Moving Average (50) 341.33 Sell
Exponential Moving Average (100) 345.29 Sell
Simple Moving Average (100) 353.34 Sell
Exponential Moving Average (200) 351.46 Sell
Simple Moving Average (200) 354.76 Sell
Ichimoku Cloud Base Line (9, 26, 52, 26) 323.46 Neutral
Volume Weighted Moving Average (20) 323.87 Sell
Hull Moving Average (9) 317.02 Sell