The Boeing Co. is an aerospace company, which engages in the manufacture of commercial jetliners and defense, space and security systems. It operates through the following segments: Commercial Airplanes; Defense, Space and Security; Global Services; and Boeing Capital.
Take a look at the 1-year chart of Boeing (NYSE: BA) below with my added notations:
BA had formed a down trending channel over the past couple of months. A channel is formed simply through the combination of a trend line support that runs parallel to a trend line resistance. Any (3) points can start a channel, but it’s the 4th test and beyond that confirm it. BA had several test points. Yesterday, the stock broke channel resistance, which should lead to overall higher prices for BA.
The Tale of the Tape: BA broke its channel resistance and should be moving higher. A long trade could be entered on a pullback down to the prior channel resistance, which currently sits near $130. A short trade might also be made if the stock falls back inside the channel.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT